Following a series of steep losses in the second quarter, alongside the surprise departure of CFO Dhivya Suryavedara, General Motors has beaten Wall Street expectations and returned to profitability, its third quarter results show.
"Sales in the U.S. and China are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially our full-size pickups and SUVs," interim CFO John Stapleton said Thursday. "These strong fundamentals and the positive impact of our transformation and austerity measures are helping us to deliver solid earnings, generate significant cash and quickly repay the debt we incurred during the early days of the pandemic."
Delta CFO Paul Jacobson is set to replace Stapleton next month. "I want to personally thank John for all the work he's done as he did double duty for General Motors being the CFO for North America as well as the Corporate CFO," Chairman and CEO Mary Barra said on an analyst call Thursday morning. "He did an outstanding job and should take full credit for the results in the quarter."
"Our Q3 results demonstrate the strength and flexibility of the business and our ability to recover quickly from a significant disruption," Stapleton said on the call. "We have continued our focus on launch performance, cash flow and improving the overall resilience of the business. We are laser-focused on execution and setting GM up to win in the future of mobility."
The country's second-largest automaker posted earnings of $4.1 billion, up 64% from $2.5 billion in the third quarter of 2019. The figure far exceeds analysts' $2.1 billion forecast. The company's profit margin jumped to 14.9%, a 6.5% increase from Q3 last year.
GM maintained sales figures despite a 4% drop in car sales worldwide. The pandemic-mandated auto plant shutdowns in the spring limited inventories of vehicles available for sale. Additionally, the recession cut demand, especially from fleet buyers like rental car companies, CNN reported.
But the demand that was there drove the average price of the vehicles higher, allowing GM to maintain flat earnings.
GM is continuing to make significant investments in electric-powered vehicles, it shared in the release, though it declined to provide earnings guidance for the year, citing a number of "moving pieces."
In July, one month prior to her departure for Stripe, former CFO Dhivya Suryadevara told investors GM expects the third quarter to be "slightly stronger" than the fourth.