GM Q2 2020 Earnings: $800 Million Loss On $16.8 Billion Revenue
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General Motors Company has reported its second quarter 2020 financial results today. The GM Q2 2020 earnings are headlined by an $800 million loss on $16.8 billion in revenue. Compared to the second quarter of 2019, these results represent a 133 percent decline in income and a 53 percent decline in revenue.
GM characterizes the earnings as “solid,” in light of “significant impacts to production and wholesales as a result of the COVID-19 pandemic.” Additionally, the Detroit-based automaker stated in its release announcing the figures that “the results reflect actions GM has taken over the past few years to be more resilient.”
GM Q2 2020 Earnings Summary
Figures in billions of USD, except for per share amounts and percentages.| METRIC | Q2 2020 | Q2 2019 | Q2 2020 - Q2 2019 ($) | % CHANGE Q2 2020 / Q2 2019 (%) |
|---|---|---|---|---|
| EPS DILUTED - ADJUSTED | -$0.50 | $1.64 | $-2.14 | -130% |
| GAAP METRICS | ||||
| NET REVENUE | $16.8 | $36.10 | $-19.30 | -53% |
| INCOME | -$0.80 | $2.42 | $-3.22 | -133% |
| AUTOMOTIVE OPERATING CASH FLOW | -$8.00 | $3.80 | $-11.80 | -460% |
| EARNINGS PER SHARE (EPS) DILUTED | -$0.56 | $1.66 | $-2.22 | -134% |
| NON GAAP METRICS | ||||
| % EBIT-ADJUSTED MARGIN | -3.2% | 8.40% | -11.6% | -138% |
| EBIT-ADJUSTED | -$0.5 | $3.00 | $-3.50 | -117% |
| ADJUSTED AUTOMOTIVE FREE CASH FLOW | -$9.00 | $2.50 | $-11.50 | -460% |
“We have a track record of making swift and strategic decisions to ensure our long-term success for the benefit of all our stakeholders. We will continue to drive the necessary change throughout the company to enable growth as we prepare to deliver a world with zero crashes, zero emissions and zero congestion,” said GM CEO Mary Barra in a press release.
Segment Results
GM Q2 2020 earnings broken out by business unit are as follows:
- GM North America: -$100 billion EBIT-adjusted vs. $3.0 billion EBIT-adjusted in Q2 2019. The results were near break-even, despite impacts of lower production as a result of COVID-19 pandemic, partially offset by strong pricing and cost actions.
- GM International: -$0.3 billion EBIT-adjusted vs. break-even results in Q2 2019. The results were affected by lower wholesales as a result of the COVID-19 pandemic, partially offset by cost actions.
- China equity income was $200 million, equal to that of Q2 2019.
- GM Financial: $0.2 billion EBT vs. $0.5 billion loss in Q2 2019.
- GM Cruise: -$0.2 billion EBIT-adjusted vs. -$0.3 billion loss in Q2 2019.
“Clearly, the second quarter was a challenge, but we achieved near breakeven EBIT-adj. in North America, despite losing 8 of 13 weeks of production. These results illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future,” said GM CFO Dhivya Suryadevara.
GM Q2 2020 Sales
Global GM sales fell about 24.3 percent to 1,466,229 units during the second quarter of 2020, caused by the impact of the coronavirus pandemic.
Chevrolet Silverado sales and GMC Sierra sales were strong, leading to year-over-year U.S. market share growth despite tight inventory. GM says that solid demand resulted in stronger average transaction pricing and lower incentives, with full-size pickup ATPs increasing $1,526 versus the first quarter, based on J.D. Power data.
| Model | Q2 2020 / Q2 2019 | Q2 2020 | Q2 2019 | YTD 2020 / YTD 2019 | YTD 2020 | YTD 2019 |
|---|---|---|---|---|---|---|
| Total | -14.1% | 122,432 | 142,464 | +4% | 267,166 | 256,777 |
| Silverado LD | -18.6% | 89,465 | 109,930 | +4.1% | 202,390 | 194,426 |
| Silverado HD | -0.7% | 31,279 | 31,496 | +1.7% | 62,052 | 61,037 |
| Silverado MD | +62.6% | 1,688 | 1,038 | +107.3% | 2,724 | 1,314 |
| Model | Q2 2020 / Q2 2019 | Q2 2020 | Q2 2019 | YTD 2020 / YTD 2019 | YTD 2020 | YTD 2019 |
|---|---|---|---|---|---|---|
| Total | -5.3% | 53,824 | 56,857 | +9.7% | 106,833 | 97,403 |
| Sierra LD | -9.5% | 38,825 | 42,911 | +6% | 78,666 | 74,215 |
| Sierra HD | +7.6% | 14,999 | 13,946 | +21.5% | 28,167 | 23,188 |
As originally reported by GM Authority, launch plans for GM’s all-new, full-size SUVs – the 2021 Chevy Tahoe, 2021 Chevy Suburban, 2021 GMC Yukon / Yukon XL, and 2021 Cadillac Escalade / Escalade ESV – is on track, with the first customers set to take deliveries in June.
Austerity Actions
Over the past several years, GM has taken many actions over the past several years that have positioned the company well for a downturn. During Q2 2020, GM implemented zero-based budgeting and aggressively reduced its ongoing costs through significant austerity measures, including reductions in advertising and other discretionary spending, compensation deferments and certain employee furloughs. GM says that these austerity measures are expected to normalize as production and demand stabilize. However, some of the austerity measures will remain permanent.
Ongoing Transformation
During the second quarter of 2020, GM continued to make “significant progress” on its transformational cost savings initiatives. The Detroit-based automaker has achieved $3.8 billion in cost savings since 2018, and the company expects to achieve its target of $4.0 to $4.5 billion, with another $0.2 billion in the second quarter.
Cash Flow & Liquidity
GM Q2 2020 adjusted auto free cash flow was -$9.0 billion, down $11.6 billion year over year. GM’s attributes the difference largely “to the financial impact of the pandemic and managed working capital unwind.” It was partially offset by lower capital expenditures.
The quarter benefitted from a $500-million dividend from GM’s China operations and a $400-million dividend from GM Financial. Total automotive liquidity at the end of the quarter remained strong at $30.6 billion. GM continued to invest in key product programs and launches, “including GM’s EV programs and AV vehicle technology, full-size trucks and key crossover programs.”
U.S. Sales
GM Q2 2020 sales in the U.S. – by far GM’s most profitable region – declined about 34 percent compared to a year ago. GM says that the performance was impacted by significantly reduced industry demand due to the COVID-19 pandemic and tight dealer inventories caused by the production shutdown in the first and second quarters of 2020. Overall sales showed signs of recovery, especially retail sales, which improved from the 35 percent year-over-year decline in April to around 20 percent decline in May and June.
The all-new Chevrolet Trailblazer and Buick Encore GX have been performing well in a highly competitive segment. The all-new duo of subcompact crossovers gained retail market share every month since being launch, capturing over 10 percent of small SUV segment sales, based on J.D. Power data.
Buick Encore GX
U.S. Inventory
GM says that it “is working all avenues to increase U.S. dealer stocks,” having restarted all U.S. full-size pickup truck and full-size SUV plants to three shifts, and nearly all other plants to pre-pandemic shift levels. Through July 25th, landed (on-the-ground) U.S. dealer stock has grown by 9 percent, and total vehicles in-transit was up 6 percent, since June.
In addition, the GM Fort Wayne Assembly plant will increase regular production of light-duty full-size pickups by about 1,000 units a month beginning September 1st.
We will continue our obsessive coverage of all things General Motors, and invite you to subscribe to GM Authority for more GM financial news, GM business news, and around-the-clock GM news coverage.
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Not as bad as many expected, but ugly nontheless.
Maybe someday (I doubt it ) GM will realize by producing vehicles that the consumer does not want or cheap materials used or discontinuing models ,are going to affect they’re bottom line .
…..or maybe someday there won’t be a global pandemic and high unemployment.
Or did you know GM sold more vehicles in the US than any other automaker last year? But yeah I guess your baseless claim makes sense………….