(Reuters) – General Motors Co reported a stronger-than-expected quarterly profit on Thursday, driven by renewed demand for trucks and SUVs in the United States and a rebound in China sales, sending its shares higher in premarket trading.
The company also said it would generate cash flow of $7 billion to $9 billion during the second half of the year, as sales in its two largest markets recovered more quickly than anticipated during a global pandemic.
In a statement, Chief Executive Mary Barra said the company was “well positioned to meet rising customer demand.”
GM’s U.S. sales in the third quarter fell 10% due to the COVID-19 pandemic, but results improved each month. In China, GM’s sales in the quarter rose 12%, its first quarterly sales growth in two years.
The Detroit automaker reported net income of $4 billion, or $2.78 a share in the quarter, compared with $2.35 billion, or $1.60 a share, a year earlier.
Excluding one-time items, GM earned $2.83 a share, above the $1.38 a share expected by analysts, according to IBES data from Refinitiv.
The company’s EBIT-adjusted margin in North America jumped 6.5 points to 14.9% in the quarter, reflecting the strength of its high-margin pickups.
GM repaid $5.2 billion of its revolving credit facilities during the third quarter, and an additional $3.9 billion in October.
The company expects to repay the balance by year-end while maintaining a strong cash balance. It ended the quarter with $37.8 billion in liquidity.
GM had indicated in July it would generate enough cash to pay off a $16 billion loan by the end of the year, but only if the U.S. economy continued to recover after the presidential election and there were no further significant pandemic-related production shutdowns.
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Earlier, both Ford Motor Co and Fiat Chrysler Automobiles reported stronger-than-expected third-quarter earnings.
GM shares jumped 6.1% to $37.40 in premarket trading.
Reporting by Paul Lienert and Ben Klayman in Detroit and Rachit Vats in Bangalore; Editing by Bernadette Baum and Anil D’Silva