General Motors Misses Q2 Earnings & Revenues on Recalls
General Motors Co. (GM) recorded adjusted earnings of $1.5 billion or 58 cents per share in the second quarter of 2014, missing the Zacks Consensus Estimate of 78 cents per share. In comparison, the company generated earnings of $1.4 billion or 84 cents per share in the second quarter of 2013.
Adjusted results for the second quarter of 2014 exclude the unfavorable impact of $1.3 billion or 47 cents per share related to net loss from special items. Meanwhile, in the second quarter of 2013, the company recorded unfavorable impact of $0.2 billion, or 9 cents per share from special items. Net income (on a reported basis) amounted to $0.2 billion or 11 cents per share, compared with $1.2 billion or 75 cents per share in the year-ago quarter.
General Motors Company - Earnings Surprise | FindTheBest
Revenues in the quarter grew 1.5% year over year to $39.6 billion, lagging the Zacks Consensus Estimate of $40.8 billion. The year over year increase was driven by better pricing and new product introduction.
Worldwide wholesale unit sales inched down 7.8% to 1.50 million vehicles in the quarter. Worldwide retail unit sales rose 0.6% to 2.51 million vehicles. The automaker occupied a global market share of 11.3% during the quarter, down from 11.6% in the prior-year quarter.
Adjusted earnings before interest and tax (:EBIT) went down 40.6% to $1.4 billion from $2.3 billion in the second quarter of 2013. The decline was mainly due to a $1.2 billion pre-tax charge for recall-related costs and $0.2 billion of restructuring costs included in the second quarter of 2014.
The company logged pre-tax charges of $0.2 billion for recalls and $0.1 billion in restructuring costs in the year-ago quarter. Operating loss amounted to $471 million, considerably down from a profit of $1.8 billion a year ago.
Segment Results
GM North America (:GMNA) reported a 9.3% rise in revenues to $25.7 billion during the second quarter. Adjusted EBIT declined to $1.38 billion from $1.98 billion in the second quarter of 2013.
GM Europe (GME) witnessed a 6.6% increase in revenues to $5.97 billion. The region reported a wider year-over-year adjusted loss of $0.3 billion compared with $0.1 billion in the year-ago quarter.
GM International Operations (:GMIO) results were disappointing. The operations reported a 25% decline in revenues to $3.6 billion. Adjusted EBIT increased to $0.32 billion from $0.23 billion in the comparable quarter of 2013.
GM South America (:GMSA) witnessed a 26.3% decrease in revenues to $3.2 billion. Adjusted loss was $81 million in the quarter compared with profit of $54 million in the second quarter of 2013.
GM Financial reported an impressive 42.5% rise in revenues to $1.2 billion during the quarter. EBIT in the segment was $0.3 billion, in line with the second quarter of 2013.
Financial Position
GM had cash and cash equivalents of $19.9 billion as of Jun 30, 2014 compared with $20 billion as of Dec 31, 2013. Total debt (Automotive and Financial) increased to $40.1 billion as of Jun 30, 2014 from $36.2 billion as of Dec 31, 2013. Consequently, the debt-to-capitalization ratio increased to 48.8% as of Jun 30, 2014 from 45.9% at the end of 2013.
During the first half of 2014, the company had a net cash flow of $5.8 billion from automotive operations, up from $5.7 billion in the comparable year-ago period. Capital expenditures amounted to $3.4 billion in the reported quarter versus $3.8 billion in the prior-year period.
GM currently holds a Zacks Rank #3 (Hold). Some better-ranked automobile stocks worth considering include Tower International, Inc. (TOWR), Visteon Corporation (VC) and American Axle & Manufacturing Holdings Inc. (AXL). Tower International and Visteon sport a Zacks Rank #1 (Strong Buy) while American Axle is a Zacks Rank #2 (Buy) stock.
Read the Full Research Report on AXL
Read the Full Research Report on GM
Read the Full Research Report on VC
Read the Full Research Report on TOWR
Zacks Investment Research
