General Motors eked out a $294 million profit for the first quarter despite the fallout from the coronavirus pandemic that's shuttered factories and devastated sales.
The Covid-10 outbreak cut deeply into GM's performance, costing the largest U.S. automaker $1.4 billion on a pretax basis during the first three months of the year. Of the top U.S.-based automakers, GM has the biggest operations in China where the pandemic originated in late December and shuttered factories beginning in late January.
"We believe we are positioned well to manage through this," GM CFO Dhivya Suryadevara told reporters on a conference call Wednesday morning. She declined to provide an outlook for the company, saying the second quarter is expected to be the hardest hit by the coronavirus pandemic.
GM's earnings showed some of that strain already with net profit sliding 86.7% from $2.2 billion during the same three months last year. On an adjusted basis, its pretax profit for the first quarter was $1.3 billion, down 45.9% from $2.3 billion a year ago. Revenue also slipped, but not as much. It fell 6.2% to $32.7 billion in the quarter, down from $34.9 billion a year ago.
Shares of GM jumped by more than 6% during premarket trading to about $22.60 per share. The stock is down more than 40% this year.
The company burned through $903 million in cash during the quarter, a number analysts and investors are closely tracking. GM is targeting to restart the majority of U.S. production, which ceased in March on May 18 in the U.S. and Canada under extensive safety measures.
Of the Detroit automakers, GM was expected to be best positioned to weather a crisis such as the coronavirus pandemic. For years, the automaker has aggressively cut costs and exited unprofitable markets, including Europe, to fortify its balance sheet.
GM's first-quarter U.S. vehicle sales fell 7.1% from a year ago, the company said last month.
GM, unlike its crosstown rival Ford Motor, did not release preliminary results for the quarter in an attempt to brace investors for its results. Ford burned through $2.2 billion in cash during the first quarter and warned of a more than $5 billion adjusted pretax loss for the second quarter.
Wall Street is projecting earnings per share of 30 cents on revenue of $31.1 billion, based on Refinitiv consensus estimates. Comparing reported earnings to analyst estimates for GM's first quarter isn't straightforward, though, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.
GM said at the end of March that it had about $32 billion in available cash, including $16 billion from its revolving credit facilities. The company last month signed a 364-day revolving credit agreement of $1.95 billion for exclusive use by GM Financial, the company's auto lending arm.
The automaker also announced an extension of a $3.6 billion, three-year revolving credit facility to April 2022 to help bolster its liquidity.
Automakers across the globe have been forced to conduct rolling plant shutdowns due to Covid-19. What started as a problem in China to begin the year quickly grew to a supply-base issue and then a global pandemic that shut down U.S. facilities, which remain closed.
Urged by the United Auto Workers union, GM, Ford, and Fiat Chrysler announced plans to temporarily close their plants due to the coronavirus on March 18.
Fiat Chrysler said Tuesday it expects to begin reopening its North American operations the week of May 18.
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May 06, 2020 at 07:19PM
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General Motors ekes out $294 million profit in the first quarter despite coronavirus pandemic crippling production and sales - CNBC
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