General Motors (GM) Q2 2022 results

GM CEO Mary Barra speaks with the media prior to the start of the 2017 General Motors Company Annual Meeting of Shareholders on Tuesday, June 6, 2017 at GM’s world headquarters in Detroit, Michigan.

Photo by John F. Martin for GM

General Engines on Tuesday reported second-quarter results that missed Wall Street estimates after the company was unable to ship nearly 100,000 vehicles by the end of the quarter due to parts shortages.

But the company maintained its previous full-year profit forecast, saying it is confident it will be able to ramp up production in the second half of 2022. It also confirmed it has blocked sufficient supplies of critical battery-related materials to support its mid-decade EV plans.

The shares were down about 1% in premarket trading on Tuesday.

here are the key figuresrelative to Wall Street consensus expectations as compiled by Refinitiv.

  • Adjusted earnings per share: $1.14, vs $1.20 expected and $1.97 in the second quarter 2021.
  • Revenue: $35.76 billion, compared to $33.58 billion expected and $34.17 billion in the second quarter of 2021.
  • Adjusted EBIT: $2.34 billion, compared to $4.12 billion in the second quarter of 2021.
  • EBIT-adjusted margin: 6.6%, compared to 11.2% in the first quarter of 2022 and 12.0% in the second quarter of 2021.

CEO Mary Barra said in A declaration that GM has “binding agreements” securing all the battery-related raw materials it will need to build 1 million electric vehicles a year in North America by 2025, including “new multi-year agreements” announced Tuesday with Livent Corp. for lithium, and with long-time GM battery partner LG Chem for cathode material.

Like other global automakers, GM has faced supply chain disruptions in recent quarters as Covid-19 outbreaks – and more recently, Russia’s invasion of Ukraine – have forced factory closures and wreaked havoc on logistics around the world.

These disruptions were felt at GM’s US dealerships, where inventory continues to be tight. GM’s U.S. dealerships have had only 10 to 15 days of inventory over the past year, including the second quarter, GM said Tuesday. That’s much tighter than the 60-90 days that were typical before the Covid-19 pandemic.

But GM expects more vehicles to be delivered to its dealerships soon. The company told investors on July 1 that it had approximately 95,000 vehicles with missing components in its inventory. It confirmed on Tuesday that it plans to complete and ship these vehicles – many of which are high-margin SUVs – over the next few months.

GM, like most automakers, recognizes revenue when a completed vehicle is shipped to dealerships, not before.

“We’ve operated with lower volumes due to semiconductor shortages over the past year, and we’ve delivered strong results despite those pressures,” Barra said. “There are concerns about economic conditions, of course. That’s why we’re already taking proactive steps to manage costs and cash flow, including reducing discretionary spending and limiting hiring to critical needs and positions that support growth.

“We’ve also modeled numerous downside scenarios and stand ready to take deliberate action when and if needed,” Barra said.

Barra said GM remains confident that it will meet its previous forecasts for the whole year. The company forecasts net income of between $9.6 billion and $11.2 billion for 2022.

“This confidence comes from our expectation that GM’s global production and wholesale shipments will increase sharply in the second half,” she said.

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