© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. Picture taken March 16, 2021. REUTERS/Rebecca Cook
By Ben Klayman and Paul Lienert
(Reuters) -General Motors Co on Wednesday swung to a second-quarter profit from a loss last year when the COVID-19 pandemic shut operations, and raised its full-year forecast despite an $800 million hit from the recall of the Chevrolet Bolt electric vehicle.
Net income was $2.8 billion, or $1.90 a share, compared with a loss in the year-earlier quarter of $806 million, or 56 cents a share.
GM said adjusted earnings before interest and taxes were a record $4.1 billion, and $8.5 billion in the first half. It boosted full-year EBIT-adjusted guidance to $11.5 billion-$13.5 billion, from the previous $10 billion-$11 billion.
The company expects to lose production of about 100,000 vehicles in North America in the second half, and anticipates commodity costs rising by $1.5 billion-$2.0 billion.
“The semiconductor shortage remains fluid and supply chain challenges continue” in the second half, GM said in its earnings material.
The largest of the Detroit automakers benefited from strong demand and the high prices it was able to charge for its popular trucks and sport utilities, which offset costs related to the Bolt recalls and production disruptions caused by shortages of semiconductors.
Chief Executive Officer Mary Barra, in an earnings call on Wednesday, said GM’s U.S. inventories are “pretty lean,” at 25 days’ supply. “I anticipate it will be pretty tight for the rest of the year and continuing into next.”
Like its rivals, GM faces uncertainty because of the rapid spread of the Delta variant of the coronavirus. GM, Ford Motor (NYSE:) Co and Stellantis NV, along with the United Auto Workers, on Tuesday reinstated mandatory mask wearing in their U.S. factories, and called on workers to get vaccinated.
GM’s inventories of unsold vehicles as of June 30 were half the year ago levels. It said it had $1.4 billion worth of vehicles in inventory that had been built without certain electronics modules because of the lack of semiconductors.
GM said its more bullish full-year outlook depended on having no vehicles stuck in inventory because of a lack of semiconductors.
The company reiterated its plan to introduce more than 30 electric vehicles by 2025, including two new EVs that will be aimed at commercial and small-business customers.
GM said its previously-announced investment of $35 billion between 2020 and 2025 is primarily to increase manufacturing capacity for EVs and batteries. The company said it will add EV production capacity by converting existing combustion-engine vehicle assembly plants.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.