GM Q3 2021 Earnings: Here’s What To Expect And Watch

Update: GM has officially released its earnings, which you can read all about at this link: GM Q3 2021 earnings.

General Motors will report its third-quarter 2021 earnings tomorrow, October 27^th before the opening bell. The GM Q3 2021 earnings will contain insights on many fronts relevant for investors, stakeholders and fans alike.

Expectations

The GM Q3 2021 earnings will cover the results for the three months of July, August and September. Analysts expect relatively solid results despite the ongoing supply chain disruptions headlined by a shortage of semiconductor chips, which have depleted vehicle inventories and sales volumes, while boosting profits. Analyst consensus currently calls for GM to report earnings of 96 cents per share on revenue of $26.5 billion, down 25.3 percent year-over-year.

Earlier this year, GM announced that it expects its second half of the year to be weaker than the first six months of 2021.  In that scenario, the Detroit-based automaker expects to make $3.5 billion to $4.5 billion less during the second half of 2021 as a result of a rise in commodity costs of between $1.5 to $2 billion, lower wholesale volumes, and lower earnings from its captive finance arm, GM Financial. Those losses have been offset by record vehicle pricing and profits, fueled further by surprisingly strong consumer demand.

From a sales volume standpoint, GM previously warned that wholesales for its North American division – its most profitable by a wide margin – would be about 200,000 units lower during the second half of 2021 compared to the first half of the year. Even so, GM has continued to stick to its financial guidance for the year, which includes adjusted earnings of between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share. During the first six months of 2021, GM posted adjusted earnings of $6.2 billion, or $4.21 a share.

Previously, GM also announced that it would record a recovery in the third-quarter that will offset $1.9 billion of the $2.0 billion in charges for its ongoing battery recall of the Chevrolet Bolt EV and Bolt EUV as a result of an agreement with LG, the manufacturer of the defective batteries.

Things To Watch For

Noteworthy insights during the GM Q3 2021 earnings call will include GM’s ongoing efforts to navigate the chip shortage, and when the automaker expects the situation to improve on a more permanent basis in order to rebuild inventory as production of some vehicles resumes currently and in the coming weeks and quarters.

GM’s current strategy associated with the shortage involves prioritizing chips for more profitable vehicles, namely full-size pickup trucks (Chevy Silverado and Sierra) and SUVs (Chevy Tahoe and Suburban, GMC Yukon/Yukon XL, and Cadillac Escalade/Escalade ESV). Last week, GM North America chief, Steve Carlisle, said that The General is more than halfway through shipping built-shy pickups – those trucks that have been built and parked awaiting semiconductors.

GM reported a 33 percent decline in year-over-year sales volume for the third quarter in the United States, mostly as a result of the chip situation. However, the state of affairs appears to be improving as GM is expected to resume production across all North American plants by November 1^st. Of those facilities, some will continue to operate on fewer shifts than usual, while production at two plants will continue to be idled due to retooling.

Also of note will be progress related to Cruise, a robotaxi service in which GM is majority owner. GM has been working on the first Cruise vehicle, named the Cruise Origin, and associated service that was initially set to launch roughly two years ago. Though Cruise has been making progress in testing and development, a launch timeframe has been murky.

But last month, during its investor day conference, GM said that it expects to begin charging for the service in San Francisco in 2022, pending regulatory approval.

During the same conference, the automaker also outlined financial targets that include doubling revenue and increasing profit margins to between 12 and 14 percent by 2023.

Finally, we’ll be on the lookout for any insights into GM’s highly-publicized plans to launch 30 new EVs by 2025.

Stock

The value of GM stock has increased around 40 percent to $57.37 thus far in 2021.

GM Authority will be here to bring you coverage of GM Q3 2021 earnings tomorrow morning, so be sure to subscribe for more GM financial news and around-the-clock GM news coverage.