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GM misses Wall Street Q2 earnings expectations, raises 2021 guidance

General Motors missed Wall Street’s earnings expectations for the second-quarter despite a strong profit and raising its guidance for the year.

Here’s how GM did compared with what Wall Street expected based on average estimates compiled by Refinitiv.

  • Adjusted EPS: $1.97 vs. $2.23 expected
  • Revenue: $34.17 billion vs. $30.9 billion expected

GM’s second-quarter earnings were dragged down due to about $1.3 billion in warranty recall costs, including $800 million related to the Chevrolet Bolt EV. The electric vehicle has been recalled twice in the past year due to fire risks.

The automaker on Wednesday raised its adjusted full-year guidance to between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share, up from $10 billion to $11 billion, or $4.50 to $5.25 a share.

Shares of GM were down about 3% during premarket trading to $56.35 a share.

On an unadjusted basis, net income was $2.8 billion for the second quarter compared with a loss of $758 million in the second quarter of 2020 due to the coronavirus pandemic causing rolling shutdowns of its factories. The automaker reported pretax adjusted earnings of $4.1 billion for the second quarter, up from a loss of $536 million a year earlier.

GM has been weathering challenges from a global shortage of semiconductor chips, which has caused factory shutdowns and is expected to shave billions off the industry’s earnings in 2021.

In June, GM projected better-than-expected results in the second quarter despite the industrywide impact of the shortage, which also is causing record vehicle pricing and profits.

GM on Tuesday confirmed its three North American full-size pickup truck assembly plants will be shut down next week due to the shortage.

The company said it expected its first-half EBIT-adjusted to range from $8.5 billion to $9.5 billion due to continued strong demand, better-than-expected results at GM Financial and improved near-term production. That was up from a forecast earlier this year of $5.5 billion.

CFO Paul Jacobson told investors in June that the company would update its full-year earnings forecast when it released its second-quarter results.

GM’s earnings forecast for the year was initially $10 billion to $11 billion, or $4.50 to $5.25 per share in adjusted pretax profits, and adjusted automotive free cash flow of $1 billion to $2 billion. The forecasts factored in the potential impact of the chip shortage, including a hit of $1.5 billion to $2 billion to earnings and decrease of $1.5 billion to $2.5 billion to its free cash flow.

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