DETROIT -- General Motors' second-quarter profit more than doubled to a post-bankruptcy record $2.87 billion on a strong performance in the United States, where the company saw sales fall after it cut low-profit sales to rental-car companies.
The company earned a $3.6 billion pretax profit in North America, made $500 million on its joint venture in China and managed a $137 million profit in Europe, its first in five years. But it lost money in South America because of economic woes, and profits were nearly halved in international operations because of struggles in the Middle East.
Yet GM sees the good times continuing in the United States, its main profit center, even though sales fell 4.4 percent during the first half of the year and its market share dropped a full percentage point to 16.6 percent, the lowest level since at least 1980.
Chief Financial Officer Chuck Stevens said the company's retail sales to individual buyers were up because of strong demand for high-profit pickups and SUVs, plus the effect of redesigned vehicles such as the Chevrolet Malibu and Cruze sedans and the Cadillac XT5 SUV.
"Our focus is to drive profitable retail share," Stevens said. "I think the results speak for themselves."
The profit was so strong that GM raised its full-year earnings-per-share guidance by 25 cents to $5.50 to $6. Investors agreed. GM's stock rose 54 cents, or 1.7 percent, to close Thursday at $32.03.
"They have been putting up great numbers, but the market hasn't rewarded them. That's different today," said David Whiston, an analyst at Morningstar. "We'll have to see if investors will reward GM in a sustained way."
GM cautioned that the European profit probably wouldn't hold through the second half, mostly because of Britain's vote to exit the European Union. The company predicted that damage to the British pound and uncertainty in Europe would cost GM up to $400 million during the next six months.
Stevens said the company would take actions to mitigate the effects, including a change in GM's European manufacturing footprint.
The company also revealed that it spent $581 million during the quarter -- half in cash and half in GM stock -- to buy Cruise Automation, a 40-person software company that is testing autonomous vehicles on the streets of San Francisco.
The Detroit automaker said it earned $1.81 per share from April through June. Excluding special items, it made $1.86 per share, surpassing Wall Street forecasts. Analysts polled by FactSet expected $1.52 per share. Revenue rose 11 percent to $42.4 billion.
GM was optimistic about the second half of the year despite troubles in Britain and increased incentive spending in the U.S.
Early in July, GM's average spending on rebates and other discounts rose by about $1,800 to $6,125 per vehicle, according to J.D. Power data obtained by The Associated Press. Incentives on the Chevrolet Silverado pickup truck rose 37 percent from July 2015 to nearly $8,000.
But Stevens said the increase was a temporary move to sell down outgoing 2016 models to prepare for 2017s. During the first half, GM spent less than the industry on discounts, he said.
Information for this article was contributed by David Welch of Bloomberg News.
Business on 07/22/2016