Post Earnings Coverage as General Motors Doubles Profit

LONDON, UK / ACCESSWIRE / July 22, 2016 / Active Wall St. announces its post-earnings coverage on General Motors Co. (NYSE: GM). The company announced its Q2 FY16 financial results on Thursday, July 21, 2016. The automaker posted a record financial quarter since filing for bankruptcy in July 2009, beating analysts’ estimates by a wide margin while it also raised its 2016 guidance. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on June 30, 2016, GM’s net income rocketed 157% to $2.87 billion from $1.1 billion. The company’s EPS zoomed to $1.81 per share in Q2 FY16, from $0.67 per share in Q2 FY15. On an adjusted basis, GM’s earnings soared 44% to $1.86 per share, beating analysts’ average estimate of $1.49 per share. Revenue increased 11% to $42.4 billion, a record for the company, from $38.2 billion in the year-ago quarter, surpassing Wall Street’s estimate of $38.93 billion.

GM sold 2.4 million vehicles globally in Q2 FY16, which is equal to Q2 FY15 sales. Through June 30, 2016, the company sold 4.76 million vehicles globally. In the U.S., GM sold 1.44 million vehicles in H1 FY16. In China, GM and its joint ventures delivered a record 1.81 million vehicles during H1 FY16, an increase of 5.3% on y-o-y basis. In Europe, Opel/Vauxhall outperformed the industry with a 7% growth in sales to 621,000 vehicles in H1 FY16.

The Detroit-based car manufacturer earned a record $3.6 billion in adjusted earnings before interest and taxes in North America. Income from the company’s China operations remained steady at about $500 million. In Europe, GM earned $137 million profit, its first in the past five years. While GM’s South American operations lost $121 million due to economic woes.

“This was an outstanding quarter for GM,” said Mary Barra, the company’s chairwoman and chief executive officer, in a statement. Chief Financial Officer, Chuck Stevens, stated that the company’s sales to retail buyers were up due to strong demand for high-profit pickup trucks and SUVs.

“Our focus is to drive profitable retail share,” Stevens said. “I think the results speak for themselves.”

Brexit Woes

While performance in Europe was strong, GM cautioned that its European profit probably would not hold through the second half primarily due to Britain’s vote to exit the European Union. The company anticipated that damage to the British Pound and uncertainty in Europe would cost GM up to $400 million during the next six months. As per the company’s CFO, the automaker will evaluate everything over the long term, including the location of production of parts and vehicles in the market.

Guidance

In terms of its outlook for 2016 full year, GM now expects earnings in the range of $5.50 to $6.00 per share, up from the previous range of $5.25 to $5.75 per share. Analysts were projecting earnings of $5.65 per share.

Stock Performance

GM’s shares gained 1.71% to close Thursday’s trading session at $32.03, with a total volume of 36.28 million shares, marking its 12th consecutive higher close. GM’s shares have gained 8.54% in the past one month and 10.89% in the last 12 months.

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