General Motors Co. (NYSE: GM) today reported second-quarter net income attributable to stockholders of $1.7 billion and EBIT-adjusted of $2.3 billion, in line with the earnings update the company issued on July 1.
This was a significant drop of $1.1 billion in a year-over year comparison as net pricing increases, strong demand and more upscale vehicle sales were more than offset by disrupted production, increased costs and lost sales (90,000 built but not complete?) from lean inventories especially in June. In a word – semiconductors.
GM continues to expect to meet its full-year earnings guidance of between $9.6 billion and $11.2 billion, and EBIT-adjusted of between $13.0 billion and $15.0 billion. GM also forecasts full-year EPS-diluted of between $5.76 and $6.76, and EPS-diluted-adjusted of between $6.50 and $7.50.
In her letter to shareholders GM chair and CEO Mary Barra referred to a news releases just issued: “GM has also done something unique in the industry to help secure our future EV production. We have binding agreements securing all battery raw material to support our plan for 1 million units of annual EV capacity in North America in 2025. (Three EV programs are slated to start next year in North America with annual volumes of 125,000 each and more after 2025 – Autocrat.) These are commitments with strategic partners for key materials like lithium, cobalt and nickel. This includes new multi-year agreements announced today by Livent Corp., for lithium, and LG Chem, for cathode material,” Barra said. (AutoInformed: GM and LG Chem Have Deal on Battery Materials; GM: Virtual EV Specialists Available for Free Consult)
Then Barra got to the crux of the matter. “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. We have also modeled many downturn scenarios and we are prepared to take deliberate action when and if necessary. Going forward, we will continue to mitigate risk and drive down costs to help us deliver $90 billion of annual EV revenue by 2030, Barra said. However, Battery EVs are about $7000 more expensive than the internal combustion vehicles that are killing us.
GM is looking at a “moderate” and a more “severe” downturn in its planning. It will be helped here by the ~$4.5 billion in costs it shed during 2018-2020. It’s also helped by its Ultium platform. However, like all major automakers, GM’s future will be significantly affected by its suppliers and the government policies they operate under, as well as impediments or assistance by the governments where GM does business, say dysfunctional federal and state governments in the US and the severe economic contraction in China as two significant wild cards. Then there’s inflation: On commodities, GM says about 33% of its pricing is indexed; with the balance under multi-year pricing agreements. The US Department of Energy has granted GM and LG Energy Solutions a $2.5 billion loan to Ultium Cells LLc for another battery plant. GM just needs to close it.
GM Q2 Earnings at $2.3B Off -$1.1B YoY
General Motors Co. (NYSE: GM) today reported second-quarter net income attributable to stockholders of $1.7 billion and EBIT-adjusted of $2.3 billion, in line with the earnings update the company issued on July 1.
This was a significant drop of $1.1 billion in a year-over year comparison as net pricing increases, strong demand and more upscale vehicle sales were more than offset by disrupted production, increased costs and lost sales (90,000 built but not complete?) from lean inventories especially in June. In a word – semiconductors.
In her letter to shareholders GM chair and CEO Mary Barra referred to a news releases just issued: “GM has also done something unique in the industry to help secure our future EV production. We have binding agreements securing all battery raw material to support our plan for 1 million units of annual EV capacity in North America in 2025. (Three EV programs are slated to start next year in North America with annual volumes of 125,000 each and more after 2025 – Autocrat.) These are commitments with strategic partners for key materials like lithium, cobalt and nickel. This includes new multi-year agreements announced today by Livent Corp., for lithium, and LG Chem, for cathode material,” Barra said. (AutoInformed: GM and LG Chem Have Deal on Battery Materials; GM: Virtual EV Specialists Available for Free Consult)
GM is looking at a “moderate” and a more “severe” downturn in its planning. It will be helped here by the ~$4.5 billion in costs it shed during 2018-2020. It’s also helped by its Ultium platform. However, like all major automakers, GM’s future will be significantly affected by its suppliers and the government policies they operate under, as well as impediments or assistance by the governments where GM does business, say dysfunctional federal and state governments in the US and the severe economic contraction in China as two significant wild cards. Then there’s inflation: On commodities, GM says about 33% of its pricing is indexed; with the balance under multi-year pricing agreements. The US Department of Energy has granted GM and LG Energy Solutions a $2.5 billion loan to Ultium Cells LLc for another battery plant. GM just needs to close it.