General Motor's Q2 Earnings: Revenue Beat, Hikes Annual Outlook But Faces Challenges In EVs And China

On Tuesday, General Motors Company (NYSE: GM) reported a fiscal second-quarter 2024 sales growth of 7.2% year-on-year to $47.97 billion, beating the analyst consensus estimate of $45.30 billion.

The adjusted EPS of $3.06 beat the analyst consensus estimate of $2.72.

General Motors’ market share reached 8.4% for the quarter, compared to 9.1% a year ago. In the U.S., the share changed to 16.6%, up from 16.4%. Its share in China reached 6.4%, down from 8.6% a year earlier.

Adjusted EBIT for the quarter improved by 37.2% to $4.40 billion, with an adjusted EBIT margin of 9.3%, up by 210 bps. Net income margin was 6.1% versus 5.7% a year ago.

The company held $30.83 billion in cash and equivalents as of June 30, 2024. The adjusted automotive free cash flow was $5.3 billion.

General Motors CFO Paul Jacobson told CNBC that the automaker expects to see some seasonally higher commodity costs and some pricing headwinds it assumed in the second half of the year.

General Motors told CNBC that it is pausing production of its Cruise Origin autonomous vehicle, leading to a $600 million special charge in the second quarter. It also shared its plans for a joint venture in China with SAIC, including a $104 million loss in equity income during the second quarter.

Jacobson told CNBC that General Motors’ North American operations, driven by truck sales for the company’s second-quarter beat and guidance raise. At the same time, it failed to return to profitability in China.

General Motors’ electric vehicle deliveries during the quarter grew by 40% year over year to 21,930 units. However, EVs accounted for only 3.2% of its second-quarter U.S. sales.

Jacobson reconfirmed to CNBC that General Motors expects its EVs to be profitable on a production or contribution-margin basis once it reaches 200,000 units by the fourth quarter.

FY24 Guidance raise: General Motors projects adjusted EPS of $9.50 – $10.50 (prior $9.00 – $10.00) versus consensus of $9.72. 

The company projects adjusted automotive free cash flow of $9.5 billion—$11.5 billion (prior $8.5 billion—$10.5 billion) and reiterated capital spending of $10.5 billion—$11.5 billion.

Despite slower-than-expected adoption, General Motors continues to target production and vehicle wholesales of 200,000 and 250,000 all-electric vehicles in North America.

Price Action: GM shares were trading higher by 2.70% at $50.90 premarket at the last check on Tuesday.

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