GM profit beats Wall Street estimates, promises to cut inventory

By Nick Carey and Joseph White

DETROIT (Reuters) - General Motors Co on Tuesday reported a better-than-expected quarterly net profit from continuing operations despite falling revenue and promised to cut production in the second half to curtail its burgeoning inventory of unsold vehicles.

The No. 1 U.S. automaker maintained its earnings outlook for 2017. The news sent GM's shares up more than 1 percent in pre-market trading.

The results for the quarter excluded losses from the company's European operations, consisting of its German Opel brand and Britain's Vauxhall, which are being sold to France's PSA Group.

The earnings release comes at a time when Wall Street is concerned that the U.S. auto industry is entering a downturn after several years of strong sales. Automakers have reported declining sales for the past four months in a row.

Analysts are concerned over GM's inventory of unsold vehicles, reflecting decisions to stockpile pickup trucks and sport utility vehicles ahead of planned factory shutdowns to retool for new models.

But as of the end of June, GM had 105 days' supply of cars, above the 90-day supply it told investors to expect back in April. The company said on Tuesday that dealer inventories in the second quarter were up 273,000 versus the same period in 2016.

GM plans to cut North American production by 150,000 vehicles in the second half of 2017 compared to the first half, Chief Financial Officer Chuck Stevens told reporters on Tuesday.

Stevens said GM is on track to hit its target of reducing North American inventories to about 70 days of supply, and predicted that sales in the second half of the year would rise to help the company achieve that goal.

GM said it still expected to earn between $6 and $6.50 per share in 2017.

GM reported second-quarter net income of $2.4 billion or $1.60 per share, down from $2.8 billion or $1.74 per share a year earlier. Excluding one-time charges, the company reported earnings per share of $1.89.

On that basis, analysts had on average expected earnings per share for the quarter of $1.69.

The company reported revenue for the quarter of $37 billion, down from $37.4 billion a year earlier and below the $40.1 billion expected by analysts.

In pre-market trading, GM shares were up just over 1 percent from Monday's close at $36.32.

(Reporting By Nick Carey; Editing by Nick Zieminski)