Third-quarter profits for General Motors (NYSE:GM) beat Wall Street estimates thanks to continued strong demand for trucks and SUVs in the United States.
GM's third-quarter net income of $4 billion, or $2.78 per share, was a strong improvement from the $2.35 billion or $1.60 per share it reported in the third quarter of 2019.
On an "adjusted" basis, excluding one-time items, GM earned $2.83 per share, well above the $1.38 per-share average estimate from Wall Street analysts polled by Thomson Reuters. Revenue of $35.5 billion was in line with estimates.
GM's U.S. sales fell 10% in the third quarter overall.However, results improved month to month, and sales of its most profitable products remained strong throughout the quarter. The company's adjusted operating profit margin in North America, a widely watched figure, was a stout 15%. GM's overall adjusted operating margin was 14.9%, up 6.5 percentage points from a year ago.
GM's sales in China, where the COVID-19 pandemic peaked earlier in the year, were up 11.9% from the third quarter of 2019.
Interim CFO John Stapleton said that sales in both the U.S. and China are recovering faster than expected. That — along with GM's ongoing cost-control measures — drove the strong results.
The strong quarter allowed GM to pay down some of the debt it incurred earlier in the year, when it drew down its credit lines ahead of a protracted manufacturing shutdown amid the pandemic, said Stapleton. GM paid down $5.2 billion of its revolving debt during the quarter, and another $3.9 billion in October.
The automaker ended the quarter with a total of $28.7 billion in debt, versus $30.2 billion in cash and an additional $7.6 billion in undrawn credit lines.
CEO Mary Barra said that GM expects to repay the remainder of the cash drawn from its credit lines, about $6.7 billion, by the end of 2020.