GM's 1Q earnings drop on slower global sales

Slower North American sales and a flat international business at General Motors underscored lower profits and revenue in the first quarter, sending shares down in pre-market trading on Wall Street.

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TickerSecurityLastChangeChange %
GMGENERAL MOTORS COMPANY35.32-0.10-0.28%

The Detroit-based carmaker is in the midst of shifting its operations away from passenger cars towards electric and autonomous vehicles, as well as trucks and sports utility vehicles, one that is expected to lead to as many as 14,000 job cuts.

As part of that transformation, GM on Monday said it planned to double the number of employees in its self-driving division in 2019, which continues to lose money. The sector cost the company $169 million in the three months through March.

"We expect to main the leadership position we are in now," CEO Mary Barra told investors on its autonomous vehicle effort, adding that updates are expected "later this year."

Unlike Google's Waymo, which rolled out its commercial self-driving operation in December through partnerships with traditional carmakers, GM's Cruise is developing the software to put into its own cars.

Overall, revenue in the quarter dropped 3.4 percent to $35 billion, less than analysts predicted. Meanwhile, net income grew to $2.1 billion, or adjusted to $1.41 per share, higher than Wall Street estimates.

A portion of the profits came from GM's stake in Lyft, which went public earlier this year. The company still expects the double-digit tariffs on steel and aluminum imports to add $1 billion in costs in 2019.

The results "were in line with expectations," according to Barra.

"My confidence in the year ahead remains strong, driven by our all-new full-size truck launch and our ongoing business transformation," she said in a statement.

GM's profits in the U.S., Mexico and Canada were down 15 percent to $1.9 billion, while net income outside the region declined 84 percent to $31 million.

The bulk of the North American sales came from trucks, up 20 percent year-over-year, and the bottom-line was bolstered by a $5,800 increase in the average transaction price.

GM is rolling out its 2020 Chevrolet Silverado HD and GMC Sierra HD trucks in the second half of 2019, offerings that Barra expects will help the company regain market share in the segment.

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In Asia, sales fell 14 percent. GM plans to introduce 20 new vehicles in China this year, as sales in the world's most lucrative auto market continue to stall.