General Motors President and CEO, Mary Barra, on April 1, 2020 tours one of the company’s facilities in Warren, Michigan, which will produce Level 1 face masks.
GM
General Motors lost about $ 800 million and burned billions of dollars in cash in the second quarter in what is expected to be the worst three months of the year for the auto industry as the coronavirus pandemic closed factories and devastated factories. sales.
GM’s results released Wednesday reflected a 34% drop in vehicle sales in the US, which the company attributed to a drop in demand “due to the COVID-19 pandemic and adjusted inventories of distributors caused by the closure of production in the first and second quarter. “
GM’s loss is in stark contrast to the $ 2.42 billion profit it made in the same three months last year. Revenue for the three months ended June 30 fell to $ 16.78 billion, a drop of more than 53% from $ 36.1 billion over the same period last year.
However, the loss is not as bad as Wall Street feared and it helped boost stocks by nearly 4% in pre-trade. On a tight basis, the company lost 50 cents a share, while analysts expected the automaker to lose $ 1.77 a share.
The company consumed about $ 8 billion in cash during the quarter, a number that analysts and investors are closely following. GM said it expected to spend between $ 7 billion and $ 9 billion in the second quarter.
This is what GM reported compared to what Wall Street expects, according to analyst average estimates compiled by Refinitive.
- EPS: A loss of 50 cents per share versus a loss of $ 1.77 per share expected.
- Revenue: $ 16.8 billion versus $ 17.3 billion expected.
Ahead of the launch, Bank of America Merrill Lynch analyst John Murphy said he expected the second quarter to be “the most difficult in modern history” for the auto industry, noting that companies “dealt with a revenue environment almost zero for a few months. ” “
Other investors and industry executives have also called the second quarter “unprecedented” and probably the worst three months of the year.
Of Detroit’s automakers, GM was expected to be better positioned to deal with a crisis as big as the coronavirus pandemic. For years, the automaker has aggressively cut costs and has exited unprofitable markets, including Europe, to strengthen its bottom line.
Read the full earnings release here.
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