General Motors Company (NYSE:GM) announced its financial results for the third quarter ended Sep 30, achieving better-than-expected revenue and net income even though Brexit fallout threatens its annual results.
According to the report, GM’s revenue for the third quarter increased 10% to $42.83 billion, surpassing analysts’ estimates of $39.3 billion. Net income was $2.77 billion for the period ended Sep 30, more than doubled from $1.36 billion in the same period last year. The operating profit excluding certain items reached $1.72 per share, which was also above the expectation of $1.45 per share. GM said that the rise in revenue and net income was boosted by demand for luxury vehicles in China’s market and light trucks in the United States. In China, customers are more interested in luxury models from Cadillac and Buick brands, and in North America, the demand for high-margin sport utility vehicles also increase.
However, due to the investors’ concerns about potential slowdown in sales and the negative effect of Brexit, shares of GM was down in early trading Tuesday in spite of strong performance in the third quarter.
“The pound sterling has deteriorated further, which creates another headwind for us,” said Chuck Stevens, the Chief Financial Officer of GM. “Breaking even this year is going to be very challenging.”
According to the company, the currency fluctuations correlated with Brexit cost GM $100 million in the period ended Sep 30. Since the company said in July that Brexit could cost $400 million in the second half of 2016, the remaining $300 million might come in the final quarter this year. To deal with the Brexit effect, GM planned to cut costs and increase prices of vehicle prices by 2.5% in the United Kingdom.