What Saved General Motors Q2 Earnings

Paul Ausick

General Motors Co. (NYSE: GM) reported second-quarter 2019 results before markets opened Thursday. The automaker posted adjusted diluted earnings per share (EPS) of $1.64 on revenues of $36.06 billion. In the same period a year ago, the company reported EPS of $1.81 on revenues of $36.76 billion. Second-quarter results also compare to the consensus estimates for EPS of $1.43 and $35.98 billion in revenues.

Net income for the quarter totaled $2.42 billion, up from $2.39 billion in the year-ago quarter. Adjusted pretax (EBIT) earnings totaled $3.01 billion, down by 5.6% from $3.19 billion in the year-ago quarter.

GM said that its average transaction price rose to $37,126 in the second quarter, about $3,450 above the industry average. Total automotive revenues came to $32.43 billion in the quarter, down by 2.6% from $33.31 billion in the second quarter of last year.

North American sales were 13.2 percentage points higher than in the same quarter last year, but sales volume dropped by 3.9% to 876,000 units. Volume sales declined in Europe, China and South America, while rising by 11.5% in the company’s international region. Sales in China were down 12.2% to nearly 754,000 units.

CEO Mary Barra commented:

Our results demonstrate the earnings power of our full-size truck franchise, with more upside to come. We will continue operating our business with discipline, and the vision needed to deliver a stronger future for our employees, customers and shareholders.

GM reiterated full-year adjusted EPS guidance in a range of $6.50 to $7.00 and adjusted free cash flow guidance of $4.5 billion to $6.0 billion. Consensus estimates call for third-quarter EPS of $1.92 and revenues of $37.09 billion. For the full year, analysts are looking for EPS of $6.62 and revenues of $146.13 billion.

Volume declines have been more than offset by higher transaction prices, especially for the company’s best-selling pickups. As long as buyers, especially in the United States, don’t balk at the higher prices, GM looks to be in good shape going into the second half of 2019.

Shares traded up about 2.4% at $41.31 in Thursday’s premarket session, within a 52-week range of $30.56 to $41.50. The 12-month consensus price target on the stock is $46.15.