General Motors Q2 Profit Beats Estimates, Sees FY21 Profit Below Market; Stock Down

gm 04aug21

General Motors Co. (GM) said its second-quarter results were better than originally expected due to strong pricing and demand, record GM Financial results and improved near-term production from the pull forward of semiconductors from the third quarter. Based on first-half performance and expectations for the rest of the year, the company increased its full-year guidance. However, the revised earnings guidance range was still below analysts' estimate. GM noted that semiconductor shortage remains fluid and supply chain challenges continue in the second-half.

Second-quarter EBIT-adjusted net income was $4.1 billion, including warranty recall costs of $1.3 billion. This is compared to a EBIT loss-adjusted of $0.5 billion, previous year. Earnings per share adjusted was $1.97 compared to a loss of $0.50. On average, 17 analysts polled by Thomson Reuters expected the company to report profit per share of $1.34, for the quarter. Analysts' estimates typically exclude special items. The company said its results were higher primarily due to the non-recurrence of the 2020 production stoppage as a result of the pandemic, strong pricing on full-size pickups and full-size SUVs and high used vehicle prices, partially offset by increased warranty, material and commodity costs.

Second-quarter net income was $2.8 billion or $1.90 per share compared to a loss of $0.8 billion or $0.56 per share, last year.

Revenue increased to $34.2 billion from $16.8 billion, previous year. Analysts expected revenue of $29.11 billion, for the quarter.

For 2021, the company now expects EPS-adjusted of between $5.40 and $6.40, revised from prior outlook of $4.50 - $5.25. Analysts polled by Thomson Reuters expect the company to report profit per share of $6.42. EBIT-adjusted is anticipated to be between $11.5 billion and $13.5 billion, compared to prior outlook of $10 billion to $11 billion.

For 2021, the company expects net income of between $7.7 billion and $9.2 billion, and EPS of between $5.12 and $6.12.

General Motors also said it is accelerating engineering and capital investments in electric vehicles (EVs) and self-driving technology (AVs) by $8 billion to $35 billion from 2020-2025. The company plans to launch more than 30 EV models in North America and China by 2025. The accelerated projects include: expanding battery cell manufacturing in the United States, adding new EV programs and capacity, and developing the third generation of GM's HYDROTEC fuel cell technology.

Shares of General Motors were down 3% in pre-market trade on Wednesday.

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