General Motors missed Wall Street second-quarter earnings expectations, raises guidance of 2021

General-Motors-missed-Wall -second-quarter-earnings-expectations,-raises-guidance-of-2021

August 5, 2021: -General Motors missed Wall Street’s earnings expectations for the second quarter despite a substantial profit and raising its guidance of 2021.

GM’s second-quarter earnings were brought down because of about $1.3 billion in warranty recall costs, which include $800 million related to the Chevrolet Bolt EV. The electric vehicle has been recalled two times in the past year regarding the fire risks.

On Wednesday, the automaker raised its adjusted full-year guidance to $11.5 billion and $13.5 billion, up from $10 billion to $11 billion.

GM shares were decreased about 3% in premarket trading to $56.35 per share.

On an unadjusted basis, net income was $2.8 billion for the second quarter in comparison with a loss of $758 million in the second quarter of 2020 because of the coronavirus pandemic causing rolling shutdowns of its factories. The automaker reported adjusted pretax earnings of $4.1 billion for the second quarter, up from a disadvantage of $536 million a year earlier.

GM has been weathering challenges from a global shortage of semiconductor chips, which resulted in the factory shutdowns and is expected to shave billions off the 2021 industry’s earnings.

On Tuesday, GM confirmed its three North American full-size pickup truck assembly plants would be shut down in the coming week due to the shortage.

In June, GM projected better-than-expected results in the second quarter despite the shortage’s industrywide impact, which is also causing record vehicle pricing and profits.

The company said it expects its first-half EBIT-adjusted to range from $8.5 billion to $9.5 billion because of the continued strong demand, better-than-expected results at GM Financial, and improved near-term production. That was up from a forecast of $5.5 billion earlier this year.

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