General Motors Co., based in Detroit, exceeded expectations with its second-quarter earnings, even after facing a recall charge. The automotive giant reported a net income of $2.566 billion, or $1.83 per share, for the quarter, compared to $1.692 billion, or $1.14 per share, in the same period last year. Adjusted per-share earnings stood at $1.91, surpassing the FactSet consensus of $1.86. Furthermore, GM’s revenue increased to $44.746 billion from $35.759 billion a year ago, which also beat the FactSet consensus of $42.133 billion.
Impact of Recall Charge and Future Plans
The company faced a setback with a $792 million charge related to new commercial agreements made with LG Electronics and LG Energy Solution, impacting their earnings for the quarter. However, GM emphasized that this decision was necessary to provide exceptional service to customers during the Chevrolet Bolt EV and Bolt EUV recall. In a statement, the company expressed its commitment to going beyond traditional remedies and taking measures that would ultimately reduce costs and enhance EV margins over time.
In addition to the strong Q2 performance, GM raised its full-year guidance for net income, projecting a range of $9.3 billion to $10.7 billion, compared to the previous guidance of $8.4 billion to $9.9 billion. The company also plans to decrease fixed costs by an extra $1 billion, on top of the previously announced $2 billion reduction, and expects to spend less than initially anticipated on capital projects.
Market Response
Although the stock remained flat during premarket trading, it has shown significant growth of 17% year-to-date, outperforming the S&P 500 index’s increase of 18.6%.
