General Motors Reports Second Quarter 2016 Net Income Of $2.9 Billion On Revenue Of $42.4 Billion2
General Motors has just announced strong second quarter 2016 earnings. The results are highlighted by a net income of $2.9 billion and earnings per share (EPS) diluted of $1.81 on net revenue of $42.4 billion.
Net income is up 157 percent over the $1.1 billion in the second quarter of 2015, earnings per share (EPS) diluted is up 170 percent over the $0.67 reported in the second quarter of 2015, and net revenue is up 10.99 percent over the $38.2 billion in the second quarter of 2015.
“This was an outstanding quarter for GM,” said Chairman and CEO Mary Barra. “Our results were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide. We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”
General Motors Q2 2016 Financial ResultsFigures in billions of U.S. Dollars except for per share amounts, percentages and deliveries
|METRIC||Q2 2016||Q2 2015||Q2 2016 - Q2 2015||% CHANGE Q2 2016 / Q2 2015|
|NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS||$2.90||$1.10||+1.80||+163.64%|
|EARNINGS PER SHARE (EPS) DILUTED||$1.81||$0.67||+1.14||+170.15%|
|IMPACT OF SPECIAL ITEMS ON EPS FULLY DILUTED||$(0.05)||$(0.62)||+0.57||+91.94%|
|AUTOMOTIVE NET CASH FLOW FROM OPERATING ACTIVITIES||$5.00||$5.10||-0.10||-3.03%|
|ADJUSTED AUTOMOTIVE FREE CASH FLOW||$3.20||$3.30||-0.10||-3.03%|
|% RETURN ON INVESTED CAPITAL (ROIC)||30.5||23.4||+7.10||+30.34%|
Earnings Before Interest And Tax (EBIT) And EBIT-Adjusted Margin
The company reported records for earnings before interest and tax (EBIT) adjusted of $3.9 billion and EBIT-adjusted margin of 9.3 percent. These compare to EBIT-adjusted of $2.9 billion and EBIT-adjusted margin of 7.5 percent in the second quarter of 2015, which included the impact of $0.3 billion ($300 million) in restructuring costs.
Earnings Per Share
EPS diluted-adjusted was a record at $1.86, up 44 percent compared to $1.29 in the second quarter of 2015.
Net revenue of $42.4 billion was a record. It compares to $38.2 billion in the second quarter of 2015.
Holding exchange rates constant, net revenue was $5.0 billion higher than in the second quarter of 2015.
Regional Division Results
- GM North America reported record EBIT-adjusted of $3.6 billion compared with $2.8 billion in the second quarter of 2015. For the quarter, EBIT-adjusted margin was a record 12.1 percent, compared to 10.5 percent a year ago.
- GM Europe reported EBIT-adjusted of $0.1 billion compared with breakeven EBIT-adjusted results in the second quarter of 2015. This result represents the first profitable quarter for GM Europe since the second quarter of 2011.
- GM International Operations reported EBIT-adjusted of $0.2 billion compared with $0.3 billion in the second quarter of 2015. Results included China equity income of $0.5 billion in both periods.
- GM South America reported EBIT-adjusted of $(0.1) billion, about equal with the second quarter of 2015.
- GM Financial reported earnings before tax of $0.3 billion, compared with $0.2 billion in the second quarter of 2015.
Cash Flow And Liquidity
For the quarter, automotive cash flow from operating activities was $5.0 billion and adjusted automotive free cash flow was $3.2 billion. GM ended the quarter with total automotive liquidity of $34.1 billion, and automotive cash and marketable securities of $20.1 billion.
“When you deliver cars, trucks and crossovers customers really value, and generate efficiencies across the enterprise, great results follow,” said Chuck Stevens, GM executive vice president and chief financial officer. “With our aggressive vehicle launch cadence and robust global industry sales, we are confident that we can continue to achieve strong financial performance.”
GM expects a higher proportion of volume from new or refreshed vehicles each year through 2020 compared to the prior five years, increasing to 40 percent of its total global volume, up from 26 percent in 2015.
Based on the company’s strong financial performance through the first half of 2016 and its current outlook for the second half of the year, GM now expects 2016 full year EPS diluted-adjusted to be $5.50 – $6.00, up from the previously announced $5.25 – $5.75 range.
Global Vehicle Sales
GM sold 2.4 million vehicles globally in the second quarter of 2016 to customers, about equal to the second quarter of 2015. Through June 30, the company sold 4.76 million vehicles globally.
- In the U.S., GM sold 1.44 million vehicles in the first six months of the year, which included a retail sales increase of more than 1 percent. This resulted in an improvement of GM’s U.S. retail market share to 0.4 percentage points through June, the largest retail share gain of any full-line automaker.
- In China, GM and its joint ventures delivered a record 1.81 million vehicles during the first half of the year, an increase of 5.3 percent.
- In Europe, Opel / Vauxhall outperformed the industry with a 7-percent sales increase to 621,000 vehicles in the first half of the year.
- In South America, Chevrolet (GM’s only brand in the area) saw a 19.1 percent sales decrease to 271,498 vehicles in the first half of the year.
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Cutting fleet sales and the drop in volume while making more money per unit sold is working.
I hope those worried about the drop in sales due to fleet cuts now see the wisdom here.
Volume is only part of the picture and price per unit is key too.
Note if the market goes as it is expected it is not going to grow and the profit per unit sold is going to be the golden key to survival.
The IPO price was $33 in 2010.
The share price halfway through 2016 is $32.16.
Unless you were prescient enough to buy when the stock dropped to $19 for a bit, GM is 5+ years of sideways.
The Q2 numbers are good. But as a long-term investment, well, a low-cost index fund or ETF beats GM, hands down.