General Motors Co cut its earnings forecast for 2019 on Tuesday, indicating that a 40-day strike that paralyzed virtually all of its operations in North America will cost some $3 billion in profits this year.
Nevertheless, GM shares earned about 5%, thanks to quarterly net earnings better than expected from robust US sales of high-margin pickup trucks and SUVs.
Wall Street analysts believe that strike costs are offset by three plant closures in the United States agreed with the United Auto Workers (UAW) and will boost GM’s profitability.
“The main business was solid this quarter,” financial president Dhivya Suryadevara told reporters at GM headquarters, describing the strike as “a unique impact.”
Last Friday, the 48,000 members of UAW at GM ratified a new four-year labor agreement with the Detroit company. Analysts said the 40-day strike cost GM more than $2 billion.
The automaker reported a 6% increase in sales in the United States in the third quarter, led by its highly profitable pickup trucks, SUVs and crossovers, which helped it achieve a solid profit margin of almost 11% in North America.