Thursday, 23 July 2015

GM continues “strong earnings growth”

General Motors has reported a strong earnings growth for the second quarter with net income attributable to common stockholders of $1.1 billion, which included a $1.1 billion loss from special items before tax.
Earnings before interest and taxes (EBIT) adjusted increased to $2.9 billion and EBIT-adjusted margin grew to 7.5 percent.

“The first two quarters of the year were strong as we fully capitalized on a robust North American industry and maintained our strength in China, despite the challenging conditions in that market,” said GM chief executive officer Mary Barra. 

“We said our goal was to improve our earnings and margins this year, and we are on-plan. Consistent with that, we believe our results in the second half of the year will be even better than the first half, and we’re confident we will meet our 2016 targets,” she added.

Special items before tax in the quarter included $0.6 billion related to a previously announced currency devaluation in Venezuela, $0.4 billion for asset impairments primarily for GM Thailand, and $0.1 billion for an adjustment to the estimated cost of an ignition switch compensation programme.

Net revenue in the second quarter of 2015 was $38.2 billion, compared to $39.6 billion in the second quarter of 2014. The change in revenue is more than attributed to a negative net foreign currency exchange impact. Holding exchange rates constant, net revenue was $0.9 billion higher than the second quarter of 2014.

“Our plan is generating results and giving us momentum,” said Chuck Stevens, executive vice president and chief financial officer. “Record margins in North America and strong margins in China produced a second quarter that demonstrates the earnings power of this company. We expect continued strong performance in these key markets.”

Most of GM’s earnings before interest and tax (EBIT) came from North America as the following demonstrates. The other operations were borderline.

GM North America reported EBIT-adjusted of $2.8 billion with an EBIT-adjusted margin of 10.5 per cent. These results included the impact of $0.2 billion for restructuring costs. This compared with EBIT-adjusted of $1.4 billion in the second quarter of 2014, which included the impact of recall-related costs of $1.0 billion.

GM Europe reported EBIT-adjusted of $(0.0) billion. This compares with EBIT-adjusted of $(0.3) billion in the second quarter of 2014, which included $0.2 billion for restructuring costs. 

GM International Operations reported EBIT-adjusted of $0.3 billion, compared to $0.3 billion in the second quarter of 2014. Results included China equity income of $0.5 billion, which generated a 10.2 percent net income margin.  

GM South America reported EBIT-adjusted of $(0.1) billion, compared with EBIT-adjusted of $(0.1) billion in the second quarter of 2014.  

GM Financial earnings before tax was $0.2 billion for the quarter, compared to $0.3 billion in the second quarter of 2014. 

In the year-to-date through to July 21, GM has returned more than $3.1 billion of cash to shareholders through share repurchases of $2.1 billion and dividends of $1.1 billion.

Also, GM ended the quarter with strong total automotive liquidity of $34.9 billion.  Automotive cash and marketable securities was $22.8 billion compared with $25.2 billion at year-end 2014.

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