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GM Q2 Profit Misses Estimates; Confirms FY22 View

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Auto major General Motors Co. reported Tuesday weak earnings for its second quarter, below market estimates, mainly reflecting the impacts of the semiconductor shortage and other supply chain disruptions, especially in June. Revenue, however, increased and topped market estimates. Looking ahead, the company said its outlook for the second half is strong and reaffirmed its fiscal 2022 outlook.

In pre-market activity on the NYSE, GM shares were losing around 1.3 percent to trade at $34.07.

The company said the outlook reflects its expectation that GM global production and wholesale deliveries will be up sharply in the second half.

GM continues to expect full-year net income between $9.6 billion and $11.2 billion, and earnings per share between $5.76 and $6.76. On an adjusted basis, the company still expects earnings per share of $6.50 to $7.50. Analysts estimate full-year earnings of $6.89 per share.

Further, EBIT-adjusted is still expected to be between $13 billion and $15 billion.

Regarding its electric vehicles or EVs, GM said it has binding agreements securing all battery raw material to support its plan for 1 million units of annual EV capacity in North America in 2025.

By 2030, GM expects to double revenue to $275 billion to $315 billion, and to expand margins to 12 percent to 14 percent.

The company added that it will continue to mitigate risk and drive down costs to help to deliver $90 billion of annual EV revenue by 2030.

Mary Barra, Chair and CEO, said, "We have been operating with lower volumes due to the semiconductor shortage for the past year, and we have delivered strong results despite those pressures. There are concerns about economic conditions, to be sure. That's why we are already taking proactive steps to manage costs and cash flows, including reducing discretionary spending and limiting hiring to critical needs and positions that support growth."

For the second quarter, net income attributable to stockholders declined to $1.69 billion or $1.14 per share from prior year's $2.84 billion or $1.90 per share. The prior year's adjusted earnings were $1.97 per share.

On average, 17 analysts had expected the company to earn $1.30 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

EBIT-adjusted declined to $2.34 billion from $4.12 billion a year ago. EBIT-adjusted margin was down 5.4 percentage points to 6.6 percent from 12 percent a year ago.

The company's revenue for the quarter, however, rose 4.7 percent to $35.76 billion from $34.17 billion last year with strong pricing and higher volume. Analysts estimated revenues of $34.59 billion for the quarter.

In the quarter, Automotive revenues increased, while revenues from GM Financial declined.

The company noted that higher revenues reflected strong demand for its products, including the Chevrolet Silverado and GMC Sierra, and full-size Chevrolet, GMC and Cadillac SUVs, which continued their market leadership despite low inventories.

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