Despite a massive hit to its bottom line caused by the United Auto Worker's 40-day strike, General Motors still managed to beat Wall Street expectations for its third-quarter earnings. The automaker reported a drop in its profits on Tuesday, but the figures still managed to beat analysts' forecasts.
According to GM, the UAW strike is expected to cost the company around $3.8 billion for the year before interest and taxes. This will include a $1 billion loss for the company for the current quarter.
In its estimates, which include $900 million in taxes and other adjustments, the company expects that the strike will shave off $2.9 billion from its bottom line for the entire year. Based on its estimates, the UAW strike had resulted in the loss production of around 300,000 vehicles.
For its third quarter, GM reported earnings of $1.72 per share, higher than the $1.31 analysts' forecast. GM stated that the UAW strike had cut around 52 cents per share from its third-quarter earnings. The company reported total revenues of $35.47 billion, significantly higher than the $33.82 billion that was expected.
GM's overall figures are slightly lower than its figures during the same period last year, leading the company to lower its guidance for the entire year. Including adjustments, GM's profits for its third quarter had dropped to $2.31 billion, a 7.6 percent decrease from its $2.5 billion in profits over the same period last year. GM expects its full-year earnings to be around $4.50 to $4.80 per share, a downgrade from its previous forecast of $6.50 to $7 a share.
GM CFO Dhivya Suryadevara stated during the company's earnings call that its third-quarter performance remains to be "very strong" despite the obvious impact of the UAW strike.
The executive credited the company's performance on the strong sales of its crossovers and its full-size pickups in North America.
The UAW strike officially ended on Friday last week, with both sides finally agreeing on ratification of a new contract for the company's 48,000 union workers. The revision of the contract included agreed upon lump-sum bonuses, pay raises, ratification bonuses, and other benefits. At the beginning of the strike in mid-September, GM's share prices had dropped by double digits.
As of this week, GM has managed to almost fully recover from the sharp double-digit declines. Following the release of its earnings report, GM's share prices increased by as much as 4.5 percent during Tuesday's afternoon trading.
