General Motors provided investors with good news as second-quarter net income came in a $2.8 billion on revenue of $34.2 billion — a dramatic reversal from last year’s $758 million loss for the same quarter.
The company’s earnings before interest and taxes came in at a robust $4.1 billion. That includes warranty costs of $1.3 billion, of which $800 million is related to battery issues plaguing the Chevrolet Bolt EV.
The strong results came despite being plagued by the ongoing chip shortage, forcing GM to creatively manage its production schedule and restricted access to semiconductors used on its most profitable and popular models, such as full-size pickups.
“The credit for our strong first half goes to our employees and extended team, including suppliers and dealers, who have collectively demonstrated strength, agility and resilience,” Chairman and CEO Mary Barra said in a letter to shareholders.
First half results force new look for full-year guidance
The Q2 results just bolstered the company’s big start to the year. Through the first six months of 2021, the company’s net income was $5.8 billion on $66.6 billion of revenue compared with a loss of $494 million on revenue $49.5 billion compared the year-ago period.
The company reported EBIT for the first half of this year came in at $8.5 billion. As a result, the massive improvement year-over-year, Barra announced full-year guidance on net income was revised upward to net income of between $7.7 billion and $9.2 billion while EBIT-adjusted income will be between $11.5 billion and $13.5 billion.
Previously the company’s expectations were between $10 billion and $11 billion. Additionally, it expects full-year EPS-diluted of between $5.12 and $6.12, and EPS-diluted-adjusted of between $5.40 and $6.40 for 2021.
GM Financial adding to the bottom line
Bolstering its first half results is the company’s captive financial arm, GM Financial. The lending division brought in EBIT-adjusted profit of $1.6 billion during the second quarter. Officials believe that will continue throughout the year.
“We received $1.2 billion in dividends from GM financial year to date, and we anticipate additional dividends to be paid in 2021, as we benefit from their record earnings,” said Paul Jacobson, GM’s chief financial officer, during the company’s earnings call with analysts and investors.
