GM Reports Q2 2016 Income Up 157%, $2.9 Billion

[FenwickHockey65]

GM Reports Second-Quarter Net Income of $2.9 Billion, Up 157 Percent
General Motors

July 21, 2016

• Strong EPS diluted of $1.81; record EPS diluted-adjusted of $1.86
• Record net revenue of $42.4 billion, up 11 percent
• Record EBIT-adjusted of $3.9 billion, up 37 percent
• GM North America sets records for EBIT-adjusted of $3.6 billion, 12.1 percent margin

DETROIT – General Motors Co. (NYSE: GM) today announced strong second-quarter net income to common stockholders of $2.9 billion, up 157 percent compared to $1.1 billion in the second quarter of 2015. Earnings per share (EPS) diluted was a strong $1.81, compared to $0.67 in the second quarter a year ago.

EPS diluted-adjusted was a record at $1.86, up 44 percent compared to $1.29 in the second quarter of 2015.

The company reported records for earnings before interest and tax (EBIT) adjusted of $3.9 billion and EBIT-adjusted margin of 9.3 percent. These compare to EBIT-adjusted of $2.9 billion and EBIT-adjusted margin of 7.5 percent in the second quarter of 2015, which included the impact of $0.3 billion restructuring costs.

“This was an outstanding quarter for GM,” said Chairman and CEO Mary Barra. “Our results were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide. We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”

Net revenue of $42.4 billion was a record, compared to $38.2 billion in the second quarter of 2015. Holding exchange rates constant, net revenue was $5.0 billion higher than the second quarter of 2015.

Segment EBIT-Adjusted Results

• GM North America reported record EBIT-adjusted of $3.6 billion compared with $2.8 billion in the second quarter of 2015. For the quarter, EBIT-adjusted margin was a record 12.1 percent, compared to 10.5 percent a year ago.
• GM Europe reported EBIT-adjusted of $0.1 billion compared with breakeven EBIT-adjusted results in the second quarter of 2015. This result is the first profitable quarter since the second quarter of 2011.
• GM International Operations reported EBIT-adjusted of $0.2 billion compared with $0.3 billion in the second quarter of 2015. Results included China equity income of $0.5 billion in both periods.
• GM South America reported EBIT-adjusted of $(0.1) billion, about equal with the second quarter of 2015.
• GM Financial reported earnings before tax of $0.3 billion, compared with $0.2 billion in the second quarter of 2015.

Cash Flow and Liquidity
For the quarter, automotive cash flow from operating activities was $5.0 billion. Adjusted automotive free cash flow was $3.2 billion. GM ended the quarter with total automotive liquidity of $34.1 billion, and automotive cash and marketable securities of $20.1 billion.

“When you deliver cars, trucks and crossovers customers really value, and generate efficiencies across the enterprise, great results follow,” said Chuck Stevens, GM executive vice president and chief financial officer. “With our aggressive vehicle launch cadence and robust global industry sales, we are confident that we can continue to achieve strong financial performance.”

GM expects a higher proportion of volume from new or refreshed vehicles each year through 2020 compared to the prior five years, increasing to 40 percent of its total global volume, up from 26 percent in 2015.

2016 Outlook
Based on the company’s strong financial performance through the first half of 2016 and its current outlook for the second half of the year, GM now expects 2016 full year EPS diluted-adjusted to be $5.50 – $6.00, up from the previously announced $5.25 – $5.75 range.

Global Vehicle Sales
GM sold 2.4 million vehicles globally in the second quarter of 2016 to customers, about equal to the second quarter of 2015. Through June 30, the company sold 4.76 million vehicles globally.

In the U.S., GM sold 1.44 million vehicles in the first six months of the year, which included a retail sales increase of more than 1 percent. U.S. retail market share rose 0.4 percentage points through June, the largest retail share gain of any full-line automaker. In China, GM and its joint ventures delivered a record 1.81 million vehicles during the first half of the year, an increase of 5.3 percent. In Europe,
Opel / Vauxhall outperformed the industry with a 7-percent sales increase to 621,000 vehicles in the first half of the year.

[GrandAmGT]

Good for General Motors.

[Thor142]

You mean GM isn't going to go bankrupt because of slow 6th gen Camaro sales?

[DGthe3]

One slightly worrying thing is that approximately all the profit is coming from North America -which accounts for only about 35 to 40% of their total sales. There are billions in profit up for grabs in other regions. Obviously GM shouldn't be expected to make the same kinds of margins on every single sale around the world ... but getting global operations to net half the profit of North America should be a reasonable goal.

[snizzle]

Originally Posted by Thor142

You mean GM isn't going to go bankrupt because of slow 6th gen Camaro sales?

Any theories on slow 6th gen? Priced too high? Too similar styling?

[DGthe3]

Originally Posted by snizzle

Any theories on slow 6th gen? Priced too high? Too similar styling?

I don't understand the 'too similar styling' argument.

If you liked how it looked before (enough to buy one), why would similar styling prevent you from buying a new one? Not being radically different would be a selling point, not a deal breaker.

[snizzle]

Originally Posted by DGthe3

I don't understand the 'too similar styling' argument.

If you liked how it looked before (enough to buy one), why would similar styling prevent you from buying a new one? Not being radically different would be a selling point, not a deal breaker.

I would agree. I love the styling on both (except the bumper badge placement on the 6th, easily solved).

But the Mustang is crushing it right now. It's clearly not the superior car from a performance standpoint. So why then is the better product losing?

[FenwickHockey65]

Originally Posted by snizzle

I would agree. I love the styling on both (except the bumper badge placement on the 6th, easily solved).

But the Mustang is crushing it right now. It's clearly not the superior car from a performance standpoint. So why then is the better product losing?

Well Mustang is cheaper.

[snizzle]

Originally Posted by FenwickHockey65

Well Mustang is cheaper.

I don't think that principle applies 100% of the time. Sometimes you're willing to spend more money if the product is superior? Or nah?

[FenwickHockey65]

Originally Posted by snizzle

I don't think that principle applies 100% of the time. Sometimes you're willing to spend more money if the product is superior? Or nah?

Definitely.

But I think the problem here is the folks who aren't hardcore Camaro or Mustang fans and those who really couldn't care less about 0-60 or lap times, the ones who just want a cool car, are looking at the price tags on both cars and saying "well this is a no-brainer."

Chevrolet/Camaro fans will buy Camaros. Those looking for the best in class pony car will buy Camaros. That 16 year old who just got his/her license and is on Dad's/Mom's budget is going to end up in a Mustang V6.

[DGthe3]

Also, GM has intentionally scaled way back on fleet. So now when Avis or Budget or whoever wants a pony car as a 'fun' offering its going to be a Mustang. That makes for a fairly big swing in monthly sales, but at the same time it makes the per-unit profitability of the Camaro substantially higher.

[ChefBorOzzy]

These are good numbers.. Lower fleet and healthier margins will be important for the inevitable lower sales years coming for the industry.

[Thor142]

Originally Posted by snizzle

Any theories on slow 6th gen? Priced too high? Too similar styling?

Only about 1000 pages worth on different threads

I think it's simple. Average buyers shop on base model price and then add options from there. Base GT is cheaper than 1SS. People in general aren't very smart shoppers.