General Motors (GM) sails on a rocky road. Trump’s prices are reaching the benefits of the company while its VE efforts are faced with an uncertain future.
The legendary automaker said that net profit had dropped by 35% from one year to the next, because the prices reached its profit of $ 1.1 billion during the quarter. GM warned that the toll could increase in the second half of the year, reiterating its previous estimate with a blow of $ 4 billion to $ 5 billion for the year.
The shares dropped 7% during the day, even if the company’s adjusted profit per share of $ 2.53 and a turnover of $ 47.1 billion beat Bloomberg Consensus of $ 2.33 billion and $ 46.27 billion, respectively. Its stock is down 4% over a year.
GM said that “made solid progress” in attenuation of at least 30% of the price load expected by quarter -manufacturing and the supply chain.
These include an investment of $ 4 billion in assembly factories based in the United States, which will add 300,000 production capacity units for microphone-pasts, full size and multisgments. CEO Mary Barra declared when he calls for results that “GM plans to build more than 2 million American vehicles per year within 18 months”.
Citi Michael Ward analyst noted that GM seems “prepared for the worst case, there is therefore a potential for a certain advantage of the way we look at him”.
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GM’s underlying results have shown a certain resilience. During the second quarter, it sold 974,000 vehicles, an increase of 7.3% year by year. It sold 46,300 electric vehicles, compared to 31,900 in the last quarter.
Tom Narayan, from RBC Capital, said in a research note that there was a wider market trend where companies saying that profits “beat and / or have always increased original sales”. He said it reflects investor concerns about prices, cost increases and a difficult macroeconomic environment.
For GM, the profitability of its EV division is also uncertain, because competition increases and that consumer demand slows down. The federal tax credit of $ 7,500 EV, a key to the affordability of the EV, expires in September.
Barclays analyst Dan Levy said that “these changes indicate that profitability will probably become a little more delicate”. GM was supposed to use the scale to generate profits for electric vehicles, which is more difficult to do when sales are slowing down, added Levy.
Barra, however, reaffirmed the company’s commitment to the profitability of each model of electric vehicles. It did not provide a difficult chronology but said: “I am very optimistic about the place where we are going to be on electric vehicles while we continue to advance over the next two years.”
Meanwhile, GM is gaining ground in China, with profitable joint ventures, new hybrid models and stricter stock control. The company posted sales growth from one year to the other in the region for the second consecutive quarter and returned to the profitability of this quarter.
