General Motors Co. surprised Wall Street Thursday by doubling its second-quarter profit. A big reason was higher prices for its vehicles worldwide.
GM's net income totaled $2.5 billion, or $1.54 per share. That compared with $1.3 billion, or 85 cents per share, in the same quarter a year earlier.
Chief Financial Officer Dan Ammann said GM gained $1 billion from higher prices for its cars and trucks. GM was able to pull back on rebates and other deals in the second quarter because of severe earthquake-related shortages at Toyota Motor Corp., Honda Motor Co. and other competitors. The company also has raised prices to compensate for the higher cost of raw materials such as steel, although Ammann said raw material costs abated somewhat in the second quarter. Popular products like the Chevrolet Equinox and GMC Terrain also didn't need incentives to sell in big numbers.
It was GM's third straight quarterly profit since its initial public offering of stock in November, and its sixth straight overall.
Revenue rose 19 percent to $39.4 billion, while sales rose 7 percent to 2.3 million cars and trucks. Although sales softened somewhat in the U.S. and Europe because of buyers' worries about the economy, GM gained market share in every region outside South America.
It won more customers in the U.S. thanks to the new Chevrolet Cruze small car, which was the best-selling car in America in June. The Cruze also sold well in China, where Chevrolet's June sales rose 34 percent.
"GM's investments in fuel economy, design and quality are paying off around the world," GM Chairman and CEO Dan Akerson said in a statement.
The company's stock rose 58 cents, or 2.1 percent, to $27.75 in pre-market trade.
GM's shares have been trading nearly 20 percent below the offering price of $33 in November. They peaked at $39.48 in January but fell to a low of $27.05 on Tuesday. Investors are concerned about the strength of the economic recovery and the health of a company that is just two years out of bankruptcy protection. GM reported its biggest profit in more than a decade in the first quarter, but its stock fell as investors noted that nearly half the profit was from the sale of GM's stake in an auto parts company.
GM's results are being closely watched by the U.S. government, which still holds 500 million GM shares that it got as part of the company's 2009 bailout package. The government needs $26.4 billion to recoup its full investment in GM, meaning GM's shares would have to sell for roughly $53 per share.
The Treasury Department said in May that it would wait until this month, at the earliest, to sell more GM shares. But it could also decide to wait until after GM completes its latest contract talks with the United Auto Workers union. The UAW contract expires Sept. 14.