GM chairman and CEO Mary Barra: "This was an outstanding quarter"

GM chairman and CEO Mary Barra: "This was an outstanding quarter"

General Motors has substantially beaten expectations with second quarter 2016 results including record earnings per share (EPS) of US$1.86 (up 44% year on year and ahead of forecast by $0.35) on revenue up 11.1% to $42.4bn ($3.47bn better than expected) and net income up 157% to $2.9bn. GM Europe finally moved back into profit for the first time in five years.

Quarterly revenue and the EBIT-adjusted $3.9bn (up 37%) were also record amounts.

In addition, the GM North America unit alone set records for EBIT-adjusted $3.6bn, and a 12.1% margin.

GM noted in a statement the second quarter 2015 EBIT-adjusted $2.9bn and EBIT-adjusted 7.5% included the impact of $0.3bn in restructuring costs.

"This was an outstanding quarter," said chairman and CEO Mary Barra. "Our results were generated by strong retail sales in the US, record sales in China and a continued emphasis on improving the performance of our operations worldwide."

GM North America reported record EBIT-adjusted of $3.6bn compared with $2.8bn in the second quarter of 2015. For the quarter, EBIT-adjusted margin was a record 12.1%, compared to 10.5% a year ago.

GM Europe moved further back into the black with an EBIT-adjusted $0.1bn result compared with break-even a year ago. Q2 2016 was the first profitable quarter since Q2 2011.

GM International Operations reported EBIT-adjusted of $0.2bn compared with $0.3bn in the second quarter of 2015. Results included China equity income of $0.5bn in both periods.

GM South America reported EBIT-adjusted of $(0.1)bn, about equal with second quarter 2015.  

GM Financial reported earnings before tax of $0.3bn, compared with $0.2bn in the second quarter of 2015.   

"When you deliver cars, trucks and crossovers customers really value, and generate efficiencies across the enterprise, great results follow," said GM executive vice president and chief financial officer Chuck Stevens. "With our aggressive vehicle launch cadence and robust global industry sales, we are confident that we can continue to achieve strong financial performance."   

GM said it expected a higher proportion of volume from new or refreshed vehicles each year to the end of 2020 compared to the previous five years, increasing to 40% of its total global volume, up from 26% in 2015.

2016 Outlook

Based on the strong financial performance through the first half of 2016 and its current outlook for the second half of the year, GM now expects 2016 full year EPS diluted-adjusted to be $5.50 – $6.00, up from the previously announced $5.25 – $5.75 range.

Global vehicle sales

GM said it sold 2.4m vehicles globally in the second quarter of 2016 to customers, about equal to the second quarter of 2015. In the first half, it sold 4.76m worldwide.

In the US, GM sold 1.44m vehicles in the first six months of the year, which included a retail sales increase of more than 1%. US retail market share rose 0.4% to the end of June, the largest retail share gain of any full line automaker.

In China, GM and its joint ventures delivered a record 1.81m vehicles during the first half of the year, an increase of 5.3%.

In Europe, Opel/Vauxhall outperformed the industry with a 7% sales increase to 621,000 vehicles in the first half of the year.