For the third quarter 2016, General Motors reported earnings consisting of a net income of $2.8 billion, earnings per share (EPS) diluted of $1.76, and earnings before interest and tax adjusted (EBIT-adjusted) of $3.5 billion on net revenue of $42.8 billion. During that time frame, the automaker’s Europe division (GME) contributed a negative $100 million EBIT-adjusted (a $100 million loss). Here’s a closer look at GME’s performance during the quarter.
GM Europe Q3 2016 At-A-Glance
GM Europe divisional performance for the quarter was as follows:
- Net revenue: $4.2 billion
- EBIT-adjusted margin: negative 3.4 percent
- Sales volume: 261,000 units
- Europe market share: 6 percent
|Metric / Quarter||Q3 2015||Q4 2015||Q1 2016||Q2 2016||Q3 2016|
|Net Revenue||$4.6 Billion||$4.7 Billion||$4.7 Billion||$5.4 Billion||$4.2 Billion|
|EBIT||-$200 Million||-$300 Million||$0||$100 Million||-$100 Million|
GM Europe Q3 2016 EBIT-Adjusted Notes Of Interest
Though GM Europe’s negative $100 million EBIT-adjusted was an improvement of $100 million over the third quarter of 2015, it did represent a $200 million downward swing over the $100 million profit posted in Q2 2016.
Following are highlights and notes of interest associated with GME’s Q3 2016 EBIT-adjusted performance. All figures vs. Q3 2015, unless otherwise specified:
- Top-line revenue is down year-over-year primarily due to the impacts of Brexit
- Wholesale volume and market share are down on a year-over-year basis as part of the impact of GM’s exit from the Russian market.
- GM Europe has made substantial progress towards its plan to break-even by taking advantage of a recovering industry, cost optimization and the benefits of the Astra and Corsa launches, resulting in breakeven EBIT-adjusted in the first three quarters of 2016.
- Presenting newfound challenges to those plans, however, is Brexit — the U.K.’s June referendum to leave the European Union. Despite the referendum, GM Europe was on track to break-even for the year, as evidenced by our performance through the first nine months. The result of the referendum has adversely impacted the British Pound and the uncertainty has put strain on the U.K. automotive industry.
- GM believes that if current post-referendum market conditions are sustained through the remainder of 2016, there could be an impact of up to $0.4 billion ($400 million) to the second half of 2016, of which approximately $0.1 billion ($100 million) was reflected in GM’s third quarter results.
GM Europe Q3 2016 Key Performance Indicators
Following are factors that contributed to GME’s Q3 2016 EBIT-adjusted performance. All figures vs. Q3 2015, unless otherwise specified:
- Volume – total volume is flat while products such as the Opel Astra continue to be very well received in their local markets
- Price – flat as favorable pricing on launches was offset by unfavorable carryover pricing
- Cost – favorable year-over-year due to carryover material performance and fixed cost improvement, partially offset by incremental material majors
- Other – unfavorable due to weakening of the British Pound