Despite a billion-dollar decline, largely due to EV write-offs, General Motors beat Wall Street’s earnings forecast for the second quarter – and raised its full-year guidance, Headlight.News reports.
GM has so far written off $11 billion as it realigns its EV program.
Half-empty or half-full? That might depend upon how you look at General Motors’ second-quarter earnings numbers – though the automaker’s CEO Mary Barra clearly focused on the positive side in a letter sent to investors Tuesday morning.
Net income for the April-June period tumbled 31% compared to year-earlier numbers. That reflected additional write-offs as the automaker continues rejigging its battery-electric program. Even so, GM managed to beat Wall Street’s expectations, encouraging Barra to up the company’s full-year forecast to anywhere from $14 billion to $16 billion.
“We expect (current) trends will continue to strengthen our performance into 2027 and beyond because we have multiple engines of margin expansion and growth while maintaining our capital discipline,” CEO Barra said in a letter to shareholders.
By the numbers
In terms of net income attributable to shareholders, GM reported a figure of $1.3 billion, a 31.1% year-over decline, though adjusted earnings actually increased 30%, to $3.9 billion. Earnings per share came in at an adjust $3.57, more than 10% above the consensus analyst forecast of $3.20.
Revenues rose to $48.03 billion, up from $47.01 billion a year earlier.
Significantly, GM saw its adjusted profit margin more than quadruple, from 1.9% to 8.2%.
“These results are very consistent with what we’ve been doing for the last several years,” GM CFO Paul Jacobson said during a Tuesday morning appearance on CNBC’s ”Squawk Box.” “Our first-half earnings per share is 25% higher than the first half at any time in our history.”
EV hit
Honda is dropping the Prologue, an EV produced by GM sharing the same underpinnings as the Chevrolet Blazer EV.
Like key competitors such as Ford, Stellantis, Volkswagen and others, GM has had to make some significant changes to its battery-electric vehicle program.
That resulted in a $2.3 billion charge for the second quarter, bringing to $11 billion the write-downs to date. Company officials said it GM has “substantially” completed the EV realignment, though analysts anticipate further hits could be in store. Notably, Honda this week announced it is ending production of the Prologue. That EV shares a significant portion of its underpinnings with the Chevrolet Blazer EV, both being produced at the Detroit automaker’s plant in Ramos Arizpe, Mexico. Honda last September began phasing out the Acura ZDX which was also built at that factory.
Barra has said on a number of occasions that GM is on “a path to an all-electric future.” But she has given the greenlight to a number of other programs, including some upcoming hybrids, as well as redesigns for the big Chevrolet Silverado and GMC Sierra pickups.
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North American momentum
GM has big expectations for the updated Chevy Silverado it’s now working on.
Those full-size trucks have traditionally been GM’s most profitable product line and the automaker is looking to undercut the traditional lead of arch-rival Ford which has struggled with production problems impacting its own F-Series line-up.
GM’s North American profits were up 43% from a year ago, to $3.45 billion. But the numbers actually were down 6.8% on a unit basis for the six-month period. Much of that was due to declining EV sales due to the phase-out of federal EV tax credits last September. The automaker has lost money on virtually all of the EVs it has sold so far, meaning the impact of the sales decline was actually positive from an earnings standpoint.
Overall, Barra said GM’s “very attractive lineup” of vehicles generated average transaction prices of $52,000 during the second quarter, slightly ahead of the industry average, according to Cox Automotive.
The question, analysts have been asking, is whether rising vehicle costs are going to slow the industry’s overall momentum. The U.S. industry has failed to reach prior peak sales levels of just over 17 million and Sam Abuelsamid, lead analyst at Telemetry Research, warns automakers are losing at least 1 million potential customers a year due to rising vehicle costs.
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