GM offers buyouts to 18,000 workers after strong earnings – Boston News, Weather and Sports

DETROIT (AP) – With General Motors posting solid earnings of $ 2.5 billion in the third quarter, the Detroit automaker has stepped up cost-cutting efforts with 18,000 employees to buy back their operations.

The company, while acknowledging that it is in top form, said Wednesday it needed to be smaller to prepare for the tough times as it prepares for the future of electric and autonomous vehicles.

"Even with the progress we have made, we are taking proactive steps to take the lead in accelerating our efforts to improve overall business performance," GM said in a statement. "We do it while our business and economy are strong."

Earnings and redemption news drove GM's shares higher in Wednesday afternoon trading. The stock rose 8.6% to $ 36.43, after falling since June.

Redemption offers were made Wednesday to North American employees with 12 years of service or more. GM spokesman Patrick Morrissey did not say whether the company had a target number of downsizing, nor would it indicate whether there would be layoffs if too little employees accepted redemptions.

"We will assess the need for implementation after learning about the results of the voluntary program and other cost reduction efforts," he said.

Workers have until November 19 to make a decision and will leave the company by the end of the year, GM said. The company has 50,000 employees in North America.

The bids were made as GM's results surprised Wall Street by charging high prices for much of its model line around the world, including the United States, where it rolled out redesigned versions of its vans. Chevrolet Silverado and GMC Sierra.

"Our discipline lasted this quarter," said Dhivya Suryadevara, chief financial officer, adding that she believed that strong prices would be viable because GM was a stock of light trucks and was deploying robust versions.

The average selling price of a GM vehicle in the United States reached $ 36,000, $ 800 more than a year ago and a record for the third quarter.

Even when auto sales began to decline in the United States, China and elsewhere, GM said it was earning $ 1.75 a share. Excluding non-recurring items, the company realized $ 1.87, far exceeding analysts' forecasts, which stood at $ 1.25 per share, according to a survey by FactSet.

Revenues jumped 6.4% to $ 35.8 billion, also exceeding expectations. The company weathered a declining Chinese market well, recording a record $ 500 million in the third quarter from July to September. And its pre-tax earnings in North America, its most lucrative market, rose 33% to $ 2.8 billion, with a profit margin of 10.2%.

GM also announced more optimistic forecasts for the full year, hoping that pre-tax profits would be at the peak of its previous forecast, at between $ 5.80 and $ 6.20 per share, when the news came out. ramifications and do its best to combat the rising costs of commodities.

GM's global retail sales to individuals fell 15% in the quarter to 1.98 million vehicles. But dealer sales, the point at which GM accounts for its revenues, grew by 4.5 percent to 1.13 million.

GM was again penalized by the costs associated with its giant recall of defective ignition switches. The company recorded a charge of $ 440 million for updating the estimated costs of legal claims.

A year ago, GM posted a net loss of $ 3 billion due to a $ 5.4 billion charge for the sale of Opel and Vauxhall to the French PSA group.

The solid quarter is the result of GM's good execution by its game plan, said Jeff Windau, an analyst at Edward Jones Industrials.

"If you sell higher priced vehicles, you can offset some of the negative negatives of commodity prices," he said.

Windau was cautious about GM's long-term prospects, believing its shares were "conserved" because of the risk of rising interest rates, rising commodity prices and the potential for rising commodity prices to rise. gasoline could reduce van sales.

Suryadevara said GM expects that the price rise for basic commodities will cost the company $ 1 billion this year, including $ 400 million in the third quarter. The Trump administration imposed tariffs of 10% on imported aluminum and 25% on steel.

GM announced that its Cruise Automation Autonomous Vehicle Unit had spent $ 200 million during the quarter and that spending would likely increase as the unit prepared to deploy a stand-alone driving service in 2019.

The company's astonishing performance contrasts with rival Ford, which recorded a 37% drop in profits during the quarter, to $ 991 million, due to a drop in sales in the United States. in China.

GM has long talked about cutting costs in anticipation of an economic downturn. The company is on track to deliver on its promise to reduce overhead costs by $ 6.5 billion a year by the end of the year.

Retired CFO Chuck Stevens hinted at white-collar job cuts in April 2017 when he told analysts that GM was looking for cuts, as it would simplify operations after it was released. 39; Europe. Simplification "will allow us to take on an important structure of the company, whether it is the company's staff or the engineering staff," he said.

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