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GM Q3 Profit Down, But Results Beat View; Cuts 2019 Profit View

General Motors Co. (GM) On Tuesday reported a profit for the third quarter that declined 7.6 percent from last year. Quarterly revenue also decreased 0.9 percent. However, both adjusted earnings per share and revenue beat analysts' estimates. The company cut full-year earnings outlook citing the impact of a six-week U.S. labor strike. The company expects the 2019 calendar-year impact of the strike to be about $2.00 per share.

The United Auto Workers at General Motors on Friday ended a six-week strike against the company after union members approved a four-year contract.

The GM's new deal gives workers 3% wage increases or 4% lump sum payments in each of the four years of the contract. It has retained health care coverage for the workers. GM's regular employees will receive an $11,000 signing bonus, and its temporary employees will get $4,500.

GM said today that it is on track to realize its 2019 cost savings target, but revised its year-end 2020 cost savings target to $4.0 billion to $4.5 billion to reflect the company's decision to invest in its Detroit-Hamtramck plant to build an all-electric pickup truck.

Looking ahead for 2019, the company now expects earnings per share to be in the range of $4.28 to $4.69.

The company lowered its annual adjusted earnings per share guidance to a range of $4.50 - $4.80 from the prior outlook of $6.50 - $7.00 per share. Analysts expect annual earnings of $5.62 per share.

GM expects full-year capital expenditures to be lower than originally projected, about $7.5 billion, due to actions taken to accelerate the achievement of its Capex target.

The company reported that its net income attributable to common stockholders for the third-quarter decreased 7.6 percent to $2.31 billion from last year's $2.50 billion, with earnings per share declining to $1.60 from $1.75 in the prior year.

The net strike impact to the third quarter GMNA EBIT adjusted was $1.0 billion including $0.3 billion of favorable timing items, or $0.52 per share.

Adjusted earnings were $2.49 billion or $1.72 per share, compared to $2.68 billion or $1.87 per share in the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $1.31 per share for the quarter. Analysts' estimates typically exclude special items.

Quarterly revenue decreased to $35.47 billion from $35.79 billion last year. Analysts expected revenues of $33.82 billion.

In pre-market activity on the NYSE, GM shares were gaining 2.35 percent to $37.50.

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