General Motors has posted a $294m profit for the first quarter. Although that is an 87% drop on last year’s Q1 result, the profit topped analyst forecasts and contrasts with a $2bn loss for the quarter posted by cross town rival Ford.
Revenue for the first quarter totalled $32.7bn, down 6.2% from the first quarter of 2019. GM didn’t provide guidance for its second quarter performance because of the uncertainty that exists under the current COVID-19 crisis and with US states in varying degrees of lockdown.
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The North America region’s results were particularly strong in Q1, with adjusted EBIT at $2.2bn (Q1 2019 – $1.9bn). GM said that the operating profit for NA was higher this year primarily as a result of strong sales of light-duty pickups and full-size SUVs, as well as ‘transformational cost actions’.
GM sales in the US declined about 7% in the quarter, driven by the effects of the pandemic. While sales have been impacted differently across geographies, GM said that for many dealers, demand for full-size trucks remained strong. Sales of GM’s full-size pickups rose about 27% year over year, with a significant gain in retail market share, the company said.
“The strength of this company has always been its people, and I am proud to stand with our best as we confront these challenges together – as one team – while we continue our transformation. We have a track record of making swift, strategic and tough decisions to ensure our long-term viability and create value for all of our stakeholders,” said CEO Mary Barra.
GM said that considerable planning is underway to restart operations in North America. Based on conversations and collaboration with unions and government officials, GM is targeting to restart the majority of manufacturing operations on May 18 in the US and Canada under ‘extensive safety measures’.
GM ended the quarter with a strong $33.4 billion in automotive liquidity, including an approximately $16bn drawdown from its revolving credit facilities. In addition, the company extended $3.6bn under its three-year revolving credit agreement, and GM and GM Financial renewed their 364-day $2 billion revolver.
GM said it has also implemented aggressive austerity measures to preserve cash to ensure the ongoing viability of its operations. This included global executive and salaried compensation deferments, and adjusted ‘non-critical program timing’. GM has suspended the quarterly dividend on its common stock and the company’s share repurchase program was also paused. In addition, GM said it has taken many actions over the past number of years to strengthen the business and ensure a strong foundation in preparation for a downturn.
