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GM beats Wall Street’s third-quarter estimates, guides toward ‘high end’ of 2021 earnings forecast

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A General Motors Co. (GM) Chevrolet 2020 Silverado HD High Country edition pickup truck sits on the assembly line during a reveal event at the GM plant in Flint, Michigan, U.S., on Tuesday, Feb. 5, 2019.

Jeff Kowalsky | Bloomberg | Getty Images

DETROIT – General Motors on Wednesday topped Wall Street’s earnings and revenue estimates for the third quarter, while telling investors its full-year results would be at the “high end” of its previous guidance.

The third-quarter was expected to be a rougher one than the first half of the year for GM. Analysts, however, said they expect relatively solid results, despite a global shortage of semiconductor chips that has depleted vehicle inventories and shuttered plants.

Here’s how GM performed, compared with analysts estimates as compiled by Refinitiv:

Adjusted earnings: $1.52 a share vs. 96 cents a share estimateRevenue: $26.78 billion vs. $26.51 billion estimate

GM’s previously told investors it would earn between $11.5 billion and $13.5 billion on an adjusted basis, or $5.70 to $6.70 a share and between $8.1 billion and $9.6 billion on an unadjusted basis.

“Our third-quarter 2021 results clearly illustrate the strength of the underlying business that is funding our future, especially when you put them in the context of the calendar year,” GM CEO and Chair Mary Barra said Wednesday in a letter to shareholders.

Strong vehicle pricing as well as income of about $1.1 billion from its financial arm also boosted GM’s results. GM Financial’s earnings through the first three quarters were $3.9 billion, up 132% from a year earlier.

Shares of GM jumped by more than 3% before retreating to a drop of about 2% before the markets opened. Shares of GM are up by 38% in 2021.

On an unadjusted basis, net income was $2.4 billion for the third quarter compared with $4 billion a year earlier, when dealerships and plants largely reopened after being shuttered during some of the second-quarter due to the coronavirus pandemic. The automaker reported pretax adjusted earnings of $2.9 billion for the third quarter, down from $5.3 billion a year earlier.

Third-quarter earnings also benefited from a deal with LG Electronics that would offset $1.9 billion of $2.0 billion in estimated costs of a recall of Chevrolet Bolt EVs due to fire risks. LG produced defective batteries for the vehicles at plants in South Korea and Michigan.

GM previously warned investors that its North American wholesale volumes would be down by about 200,000 units in the second half of 2021 compared with the first half, due to the parts problem.

In August, GM CFO Paul Jacobson said the automaker expected to take a hit of between $3.5 billion to $4.5 billion during the second half of the year, due to a $1.5 billion to $2 billion rise in commodity costs and lower earnings from its financial arm.

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