General Motors Company (GM) Q2 2014 earnings summary

Executive summary

• Revenue rose to $39.65B from $39.08B YoY, while operating income swung to a $471M loss and net income attributable to common stockholders fell to $190M.

• Adjusted EBIT was $1.4B versus $2.3B, including $1.2B of recall expense; adjusted automotive free cash flow was $1.9B versus $2.6B.

• Management said performance was on plan excluding recalls and expected H2 earnings to exceed H1 excluding recalls.

Financial highlights

• Q2 revenue was $39.65B; automotive revenue increased 0.6% to $38.46B and GM Financial revenue rose 42.2% to $1.19B.

• Operating loss was $471M versus $1.75B operating income; net income was $287M and net income attributable to common stockholders was $190M.

• Adjusted EBIT fell $0.9B YoY; volume and cost each reduced results by $1.6B, partly offset by a $1.1B favorable mix impact.

• Automotive operating cash flow was $3.6B versus $4.5B; adjusted automotive free cash flow was $1.9B versus $2.6B.

• H1 revenue increased 1.4% to $77.06B; automotive operating cash flow was $5.6B and capital expenditures were $3.4B.

Outlook and guidance

• H2 earnings were expected to exceed H1 excluding recalls; North America margins were expected to grow versus H1 and H2 2013, excluding recalls.

• Europe remained targeted to reach profitability by mid-decade; near-term improvement was not expected to be significant.

• Future North America recall costs would be accrued at vehicle sale and expected to normalize slightly above pre-H1 2014 levels.

• Repair-parts production was expected to cover most ignition-switch recall vehicles by October 2014.

• Planned launches included Chevrolet Cruze and Buick Envision in China, Opel Vivaro and Corsa in Europe, and Chevrolet Colorado and GMC Canyon in North America.