General Motors Company (GM) Q2 2012 earnings summary

Executive summary

• Q2 global deliveries were 2.391M, up from 2.320M YoY; net income attributable to common stockholders was $1.846B and adjusted EBIT was $2.119B.

• Q2 marked the 10th consecutive profitable quarter; Europe and South America remained challenging regions.

• Revenue declined largely due to U.S. dollar strength; Europe’s losses and FX weighed on earnings.

Financial highlights

• Revenue was $37.6B vs. $39.4B YoY; operating income was $1.821B vs. $2.451B.

• Net income attributable to common stockholders was $1.846B vs. $2.992B; diluted EPS was $0.90 vs. $1.54.

• Adjusted EBIT was $2.119B vs. $2.962B; adjusted EBIT margin was 5.6% vs. 7.5%.

• Automotive net cash from operating activities was $3.8B vs. $5.0B; automotive free cash flow was $1.7B vs. $3.8B.

• Adjusted EBIT decline reflected $500M unfavorable FX and $200M lower lease residual adjustments; excluding these items, core operating profitability was similar to Q2 2011.

Outlook and guidance

• FY 2012 U.S. light-vehicle sales forecast was 14.0M–14.5M units.

• Average GMNA adjusted EBIT for Q2 and Q3 was expected to be comparable to Q1; Q2 results benefited partly from spending deferred to Q3.

• European automotive conditions were expected to remain adverse through the rest of 2012, with substantial regional losses anticipated.

• U.S. salaried pension actions were expected to generate H2 pretax special charges of $2.5B–$3.5B and require $3.5B–$4.5B of additional funding by year-end.

• U.S. dealer inventory was expected to reach ~650,000 units, or 65–70 days’ supply, by year-end; full-size pickups were forecast at 200,000–220,000 units.