Inside GM’s 2Q17 Profit Margins


Jul. 27 2017, Updated 7:42 a.m. ET

General Motors’ 2Q17 report

In the preceding part of this series, we discussed how General Motors (GM) performed in its key international markets. The company’s South America sales volumes were up, which drove revenues higher in that region. But GM’s lower sales volume in North America kept global revenues down.

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GM’s 2Q17 margins

In 2Q17, General Motors reported an adjusted EBIT (earnings before interest and taxes) of 3.7 billion with an EBIT margin of 10.0%. This margin was slightly lower than its adjusted EBIT margin of 10.3% in 2Q16. GM’s 2Q16 EBIT stood at $3.8 billion.

GM’s adjusted net profits in 2Q17 came to $1.7 billion, with a net profit margin of 4.5%—lower than its adjusted net profit margin of 7.7% in 2Q16.

Key factors behind margins

In 2Q17, GM’s margins continued to benefit from its positive product mix. Notably, heavyweight vehicles such as trucks and utility vehicles tend to yield higher margins than small cars are able to yield. Last year, mainstream automakers (FXD) including GM, Ford Motor (F), Fiat Chrysler Automobiles (FCAU), and Toyota Motor (TM) benefitted from this US sales trend.

At the same time, unfavorable foreign exchange movements took a toll on GM’s profitability and stole about $200 million from its EBIT in 2Q17.

Continue to the next and final part for a look at GM’s valuation multiples after the 2Q17 results.


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