General Motors has announced second quarter 2018 results that beat analyst expectations reflecting profitability in all core operating segments. It also said it was the second consecutive quarter of records for China and GM Financial.
However, GM’s results were negatively impacted by higher commodity costs – most notably on higher steel and aluminium prices that have risen since the US imposed new import tariffs on these metals.
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GM net revenues for the quarter were posted at USD36.8bn (0.6% below Q2 last year) while operating income was USD2.4bn (2.8% under last year’s Q2).
North America profitability was down (EBIT at USD2.7bn versus USD3.4bn last year) in spite of full-size truck output running at capacity. GM blamed higher commodity costs.
GM said its full-size truck plants continued to run at more than 100-percent, two-shift capacity to meet demand and maintain inventory for current-generation pickups during the transition to all-new full-size pickups.
The launches of the all-new 2019 Chevrolet Silverado and GMC Sierra remain on track, it said, with the first highly contented crew cab deliveries to customers expected in early August.
GM said rising second-quarter US sales and market share were driven by strong deliveries of trucks, SUVs and crossovers. Cadillac will launch the XT4 for the 2019 model year.
The company said its results included the unfavourable impact of rising commodity costs and foreign currency devaluations in South America.
However, it revised its outlook for the year down and that put pressure on its stock price. GM cut its profit outlook for the year due to ongoing higher commodity prices and unfavourable foreign exchange rates in South America.
The automaker now expects to earn around USD6.00 per share in 2018, down from its previous forecast of USD$6.30-USD6.60 a share.
“Recent and significant increases in commodity costs and unfavourable foreign exchange impact of the Argentine peso and Brazilian real have negatively affected business expectations,” GM said in its earnings release, adding that it “anticipates these headwinds to continue through 2018”.
“For the rest of the year we will focus on flawlessly executing our full-size truck launches and continue managing the business with discipline in a more challenging environment,” added Chuck Stevens, GM’s CFO.
