General Motors Co on Tuesday reported a better-than-expected quarterly net profit, helped by cost cuts, and promised to cut production in the second half to curtail its burgeoning U.S. inventory of unsold vehicles.
The No. 1 U.S. automaker also maintained its earnings outlook for 2017 despite falling revenue.
The results excluded losses from the company`s European operations, consisting of its German Opel brand and Britain`s Vauxhall, which are being sold to France`s PSA Group.
GM reported second-quarter net income of $2.4 billion or $1.60 per share, down from $2.8 billion or $1.74 per share a year earlier. Excluding one-time charges, it reported earnings per share of $1.89.
On that basis, analysts had on average expected earnings per share of $1.69.
Revenue for the quarter was $37 billion, down from $37.4 billion a year earlier and below the $40.1 billion expected by analysts.
Wall Street is concerned the U.S. auto industry is entering a downturn after several years of strong sales. Automakers have reported declining sales for the past four months.
GM sold 30,000 fewer cars in the quarter, with much of the decline driven by lower sales to rental car agencies.
GM`s inventory of unsold vehicles, reflecting decisions to stockpile pickup trucks and sport utility vehicles ahead of planned factory shutdowns to retool for new models, has also stoked fears the company may have misjudged the state of the market.
At the end of June, it had a 105-day supply of cars, above the 90-day supply it told investors to expect back in April. The company said second-quarter U.S. dealer inventories jumped 273,000 versus the same period in 2016.
GM plans to cut North American production by 150,000 vehicles in the second half of 2017 from the first, Chief Financial Officer Chuck Stevens told reporters.
Stevens said GM is on track to hit its North American inventories target to about 70 days` supply, and predicted sales in the second half of the year would rise to help achieve that goal.
GM`s CFO also said earnings would be lower in the second half but the company said it still expected to earn between $6 and $6.50 per share in 2017.
"That guidance could be difficult to achieve given lower production volume, high levels of inventory and pricing concerns," Buckingham Research Group analyst Joseph Amaturo wrote in a client note.
GM shares were down 0.5 percent at $35.66.
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