General Motors records a £237 million profit in Q1 despite the Coronavirus restrictions

General Motors (NYSE: GM) recorded a £237 million profit in the first quarter on Wednesday despite the Coronavirus pandemic that brought the global auto industry to a near halt. The company’s North American business generated £1.78 billion in quarterly earnings but its international operations lost £445 million in Q1. The company reported a £1.05 billion pre-tax profit (adjusted) in the first quarter that came in 45.9% lower as compared to the same quarter last year.

In the first 3 months of 2020, GM said that COVID-19 resulted in a £1.13 billion hit to its financial performance. Its revenue printed at £26.40 billion in the recent quarter that marked a 6.2% decline versus the year-ago figure.

GM to reopen U.S and Canada factories on May 18th

In Q1, GM burned through £729 million. The company suspended operations due to the outbreak in March. The majority of its facilities in the United States and Canada, GM added, are now likely to reopen on May 18^th. The car manufacturer said that extensive health and safety measures will be in place as production resumes later this month.

In terms of vehicle sales in the U.S, GM posted a 7.1% year over year decline in the first quarter.

General Motors also said on Wednesday that it had roughly £26 billion in cash at the end of March. Its cash reserves also include around £13 billion from the company’s revolving credit line. In April, the company signed a £1.57 billion revolving credit agreement exclusively for its auto lending segment.

To further shore up liquidity, GM announced an extension of its 3-year revolving line of credit worth £2.91 billion to April 2022.

Among the U.S carmakers, GM boasts the largest business in China where the flu-like virus originated and affected its financial performance. Currently, its production in the U.S is widely disrupted as the virus shifted focus from China to the U.S as its epicentre.

GM was anticipated as best positioned to survive the COVID-19 crisis

In the past years, GM focused on quitting unprofitable markets like Europe and cost-cutting to strengthen its balance sheet. As per the analysts, GM, therefore, was best positioned to survive the economic blow from a crisis like COVID-19.

At around £17 per share, the Detroit auto manufacturer is currently more than 40% down year to date in the stock market. The company dropped to as low as £13.56 per share in March. Its performance in 2019, on the contrary, was reported fairly upbeat with an annual gain of around 10%.

General Motors is valued at £24.58 billion and has a price to earnings ratio of 4.65.