GM Reports Q2 2012 Net Income $1.5 Billion
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On the heels of announcing a drop in July sales in North America, General Motors reported second quarter 2012 earnings today, announcing net income attributable to common stockholders of $1.5 billion, $0.90 per fully diluted share, from $37.6 billion in revenue.
All results are down compared to the second quarter of 2011, as the automaker reported net income of $2.5 billion in Q2 2011, $1.54 per fully diluted share, and net revenue of $39.4 billion. The General attributes the decrease to the strengthening of the U.S. dollar versus other major currencies.
Earnings before interest and tax (EBIT) adjusted was $2.1 billion, compared with $3.0 billion in the second quarter of 2011. In addition, total restructuring expense included in EBIT-adjusted for the second quarter of 2012 was $0.1 billion.
“Our results in North America, our International Operations and at GM Financial were solid but we clearly have more work to do to offset the headwinds we face, especially in regions like Europe and South America,” said GM chairman and CEO Dan Akerson. “Despite the challenging environment, GM has now achieved 10 consecutive quarters of profitability, which is a milestone the company has not achieved in more than a decade.”
GM Segment Results
- GM North America (GMNA) reported EBIT-adjusted of $2.0 billion, compared with $2.2 billion in the second quarter of 2011.
- GM Europe (GME) reported an EBIT-adjusted loss of $0.4 billion, compared with EBIT-adjusted of $0.1 billion in second quarter of 2011.
- GM International Operations (GMIO) reported EBIT-adjusted of $0.6 billion, equal to the second quarter of 2011.
- GM South America (GMSA) reported breakeven results on an EBIT-adjusted basis, compared with EBIT-adjusted of $0.1 billion in the second quarter of 2011. The second quarter 2012 results include $0.1 billion in restructuring expenses.
- GM Financial earnings before tax was $0.2 billion for the quarter, compared with $0.1 billion a year ago.
- In the Corporate segment, GM reported EBIT-adjusted of $(0.2) billion, of which $(0.1) billion was attributable to a non-cash foreign exchange loss.
Cash Flow and Liquidity
GM’s automotive cash flow from operating activities was $3.8 billion while automotive free cash flow was $1.7 billion for the quarter. The automaker ended the quarter with total automotive liquidity of $38.5 billion — a very strong position. Meanwhile, automotive cash and marketable securities was $32.6 billion, compared with $31.5 billion at the end of the first quarter of 2012.
Referring to future earning guidance, GM expects that the average of its second and third quarter EBIT-adjusted in GMNA will be comparable to first quarter results.
“We’re executing an aggressive product plan around the world, and at the same time we are working systematically to simplify the business and truly leverage our scale to grow our margins,” said Dan Ammann, senior vice president and CFO.
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The Economic crisis is far from over…
Even though GM’s numbers are down, the far beat Wall Street expectations. Yet, the stock is down today (it _should_ be up). There is some real concern with investors that GM is playing an old trick of “forwarding” expenses to the next quarter, thereby “spending” less this quarter and having a better profit margin. There’s an expression for this, it’s called “Cooking the books”, and The Market is not fooled.
I think everyone is judging GM too hard, 1.5 billion quarter is an impressive profit for any company in these times, let alone from a company that emerged from bankruptcy just a few years ago.