GM Q2 Results Beats View; But Sees FY18 Earnings Below Estimates

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Automaker General Motors (GM) on Wednesday reported a 43 percent surge in profit for the second quarter from last year despite slightly lower revenues. However, both revenue and adjusted earnings per share beat analysts' expectations.

Looking ahead, the company forecast full-year earnings below analysts' estimates, citing increases in commodity costs and the impact of unfavorable foreign exchange. The company's shares are down 5 percent in pre-market activity.

For the second quarter, net income attributable to GM's common shareholders rose to $2.38 billion or $1.66 per share from $1.66 billion or $1.09 per share a year ago.

Adjusted earnings for the quarter were $2.59 billion or $1.81 per share, compared to $2.88 billion or $1.89 per share in the prior year.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.78 per share. Analysts' estimates typically exclude special items.

Net revenue for the quarter declined 0.6 percent to $36.76 billion from $36.98 billion last year. Analysts expected revenues of $36.73 billion.

Total wholesale vehicle sales in the quarter declined to 1.204 million units from last year's 1.213 million units.

GM's adjusted earnings before interest and tax or adjusted EBIT was $3.19 billion, down 13.3 percent from $3.68 billion last year. The decline in adjusted EBIT reflects the impact of commodity pricing and foreign currency devaluations in South America.

North America EBIT declined 22.8 percent on an adjusted basis, reflecting the unfavorable impact of rising commodity costs.

Looking ahead, GM said that recent and significant increases in commodity costs and unfavorable foreign exchange impact of the Argentine peso as well as Brazilian real have negatively affected business expectations.

The company now forecasts fiscal 2018 earnings of about $5.14 per share and adjusted earnings of about $6.00 per share. The Street expects earnings of $6.41 per share for the year.

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