DETROIT (AP) – General Motors’ (GM) second-quarter net income fell 40 per cent from a year ago as computer chip and parts shortages hobbled factory output and drove the company’s United States (US) sales down more than 15 per cent.
The Detroit automaker said it made USD1.67 billion from April through June, in part because it couldn’t deliver 95,000 vehicles during the quarter because they were built without one part or another. Last year it made USD2.79 billion.
The company reported an adjusted profit of USD1.14 per share, falling short of Wall Street expectations for USD1.27. Revenue was USD35.76 billion for the quarter, beating estimates of USD33.9 billion, according to FactSet.
Like other automakers, GM has been forced to slow its factories since late in 2020 largely due to a global shortage of semiconductors.
Despite the profit drop, GM held its full-year net income guidance steady at between USD9.6 billion and USD11.2 billion. The company still expects pretax income of USD13 billion to USD15 billion.
“This confidence comes from our expectation that GM global production and wholesale deliveries will be up sharply in the second half,” CEO Mary Barra said in a letter to shareholders yesterday.
Still, Barra said there are concerns about economic conditions, so GM is taking steps to manage costs, including reducing discretionary spending and limiting hiring to critical positions needed to support growth. “We also have modelled many downturn scenarios and we are prepared to take deliberate action when and if necessary,” Barra said.
Shares of GM fell 1.5 per cent to USD34 in trading before yesterday’s opening bell.
Most of GM’s incomplete vehicles were built in June, the company said, and it expects them to be finished and sold to dealers before year’s end. Also yesterday, GM announced that is has commitments for all the raw materials needed to reach its goal of building one million electric vehicles per year by the end of 2025.
The company also said it has a deal with LG Chem to supply nickel, cobalt, manganese and aluminium to make electric vehicle battery cathodes. LG Chem will supply over 950,000 tonnes of material during the next eight years. The two companies will explore a cathode materials production facility in North America by the end of 2025, they said in a statement.