General Motors Company (GM) decided to trim production for pickup trucks over the next 2 months in order to adjust to the slack demand of the same on the back of continued weakness in the housing and construction sectors.
The automaker has canceled five scheduled overtime shifts on Saturdays in September and October at its Flint, Michigan plant. The plant produces 900 trucks per day.
GM had already rehired 750 laid-off workers at the plant earlier this month for a third shift. It aims to have a 90-day supply of trucks at the end of 2011 and healthy supply in 2012, when it plans to transform several truck plants for production of new products.
GM’s Vice President of Sales Don Johnson stated that it would cut production before resorting to big discounts in order to sell excess supplies.
In the first 7 months of the year, sales of full-size pickup trucks in the U.S. rose 8.7% to 978,495 units. However, the growth was lower than the overall increase in sales in the U.S. auto industry (10.9%). Sales of Chevrolet Silverado, GM’s top-selling truck, went up only 7% during the period.
GM, a Zacks #3 Rank (Hold) stock, posted a profit of $2.54 billion or $1.54 per share in the second quarter of the year, which almost doubled from $1.33 billion or 85 cents per share in the same quarter of 2010. With this, the automaker has beaten the Zacks Consensus Estimate by 33 cents per share.
Revenue in the quarter appreciated 19% to $39.37 billion (including $330 million from GM Financial) on worldwide sales of 2.32 million units versus 2.16 million a year ago, thereby capturing a market share of 12.2%. It also exceeded the Zacks Consensus Estimate of $36.61 billion.
The company fared well compared with its hometown rival, Ford Motor Co. (F) during the quarter under study. Ford posted a profit of $2.64 billion or 65 cents per share in the second quarter, a $67 million or 2.5% decline from $2.70 billion or 68 cents per share in the corresponding quarter of 2010. However, the company’s profits were higher than the Zacks Consensus Estimate of 60 cents per share.
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