GM earnings beat lifts shares but U.S. strike weighs on outlook

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GM posted a stronger-than-expected quarterly profit on robust U.S. demand for its pickup trucks and SUVs, offsetting the $3-billion hit from a U.S. labor strike that led it to slash its earnings forecast For more business news, follow ReutersBiz

DETROIT - General Motors Co on Tuesday posted a stronger-than-expected quarterly profit on robust U.S. demand for its lucrative pickup trucks and SUVs, offsetting the $3-billion hit from a U.S. labor strike that led it to slash its earnings forecast.

Last Friday, the 48,000 United Auto Workers union members at GM ratified a new four-year labor deal with the Detroit company, ending a 40-day strike. RBC Capital Markets analyst Joseph Spak in a research note called the deal’s financial impact “manageable.” Virtually all of the pre-tax profits came from its North American business and its captive finance arm.

The China Association of Automobile Manufacturers expects a 5% decline in industry sales in 2019, then contracting or growing slowly over the next three years. The No. 1 U.S. automaker said the full-year impact of the strike would be around $2 per share, or around $3 billion. GM also cut its projected 2019 capital expenditures to around $7.5 billion from its previous outlook of $8 billion to $9 billion. Suryadevara said no plans were cut and the lower spend was due to operating efficiencies.

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