General Motors Chairman and CEO Mary Barra on April 1, 2020 tours one of the company's facilities in Warren, Michigan that will produce Level 1 face masks.
GM
General Motors lost about $800 million and burned through billions of dollars of cash in the second quarter in what is expected to be the worst three months of the year for the auto industry as the coronavirus pandemic shuttered factories and devastated sales.
GM's results released Wednesday reflected a 34% drop in U.S. vehicle sales, which the company attributed to a drop in demand "due to the COVID-19 pandemic and tight dealer inventories caused by the production shutdown in the first and second quarters."
GM's loss is a sharp contrast to the $2.42 billion profit it made during the same three months last year. Revenue during the three months ended June 30 slid to $16.78 billion, a more than 53% drop from $36.1 billion during the same time last year.
However, the loss isn't as bad as Wall Street feared and helped drive shares up by almost 4% in premarket trading. On an adjusted basis, the company lost 50 cents a share while analysts expected the automaker to lose $1.77 a share.
The company burned through about $8 billion in cash during the quarter, a number that analysts and investors are closely tracking. GM said it expected to spend between $7 billion and $9 billion in the second quarter.
Here's what GM reported versus what Wall Street is expecting, based on average analysts estimates compiled by Refinitive.
- EPS: A loss of 50 cents a share versus a loss of $1.77 per share expected.
- Revenue: $16.8 billion versus $17.3 billion expected.
Ahead of the release, Bank of America Merrill Lynch analyst John Murphy said he expected the second quarter would likely be "the toughest in modern history" for the automotive industry, noting that companies "grappled with close to a zero revenue environment for a few months."
Other investors and industry executives have also called the second quarter "unprecedented," and likely the worst three months of the year.
Of the Detroit automakers, GM was expected to be best positioned to weather a crisis as big as the coronavirus pandemic. For years, the automaker has aggressively cut costs and exited unprofitable markets, including Europe, to fortify its balance sheet.
Read the full earnings release here.
This story is developing. Please check back for updates.
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July 29, 2020 at 06:09PM
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GM swings to an $800 million loss as coronavirus shuttered factories and devastated sales in the second quarter - CNBC
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