GM beats quarterly profit estimates ahead of new-model wave

Ford’s Results

Ford yesterday reported second-quarter net income of $1.23 billion. Excluding some items, Ford’s per-share profit was 45 cents, exceeding the 37-cent average of 17 analysts surveyed by Bloomberg. Shares of the Dearborn, Michigan-based automaker closed at the highest level since January 2011.

Ford raised its full-year pretax profit forecast to equal or exceed last year’s $8 billion after earning $4.7 billion in the first half. The company had previously projected its annual result would be in line with last year’s. Ford also narrowed its loss forecast for Europe to about $1.8 billion from $2 billion. Its pretax loss in the region narrowed to $348 million from $404 million a year ago.

GM has predicted modest profit improvement this year because it doesn’t expect the new models to boost earnings until the second half.

Attractive Products

Goldman Sachs Group Inc. last week swapped GM for Ford on its Americas Conviction Buy list and projected that the largest U.S. automaker’s shares may rise to $45 in the next year from $37.14 at yesterday’s close. Patrick Archambault, a New York- based auto analyst for Goldman Sachs, said the new pickups will boost GM’s profit margins and that the automaker may pay a dividend by the end of the year.

“We see GM as one of the most attractive product stories in the sector,” he wrote.

The new Silverado Crew Cab began trickling into showrooms in May with plans for the double cab to arrive in the third quarter, followed by the regular cab a month to 45 days later, GM has said. It won’t be until the fourth quarter when GM is selling more of the 2014 models than 2013s.

Other new GM vehicles arriving in the fourth quarter include the redesigned Cadillac CTS sedan and refreshed Buick Regal car. The new Chevrolet Impala sedan began arriving in showrooms in the second quarter.

GM returned to the Standard & Poor’s 500 Index during the second quarter, a milestone triggered in part by the U.S. Treasury reducing its stake in the automaker. GM said in December that the U.S. planned to divest its holding within 15 months.

Shares on May 17 topped the $33 initial public offering price for the first time in two years, and a union retiree medical trust has begun selling its stock.

www.bloomberg.com

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