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General Motors’ 1Q18 Earnings: Downtime Affected Results

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GM’s 1Q18 earnings

General Motors (GM) reported its 1Q18 results today before the US market opened. The company’s adjusted earnings stood at $1.43 per share for the quarter, down about 24% YoY (year-over-year). Nonetheless, GM managed to beat Wall Street analysts’ consensus estimates of $1.27 for its first-quarter EPS. Last year, GM announced planned downtime at some of its North American facilities to retool for upcoming new variants of its all-new, full-size pickup trucks. These trucks are expected to go on sale in North America later this year.

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Downtime hurt results

In 1Q18, the company’s global vehicle deliveries increased by 0.1 million to 2.1 million vehicle units. However, General Motors’ wholesales fell 6% YoY, by 80,000 vehicle units, which affected revenue. The company reported a 3.2% YoY decline in its first-quarter revenues to $36.1 billion. Other than downtime in North America, unfavorable product mix, driven by lower sales of its full-size pickup trucks in North America, hurt GM’s 1Q18 revenue.

On the profitability front, GM’s income from continuing operations fell sharply, by 59% YoY to just $ 1.1 billion in Q1. The company attributed this fall to planned downtime in North America and its restructuring action in Korea. Moreover, General Motors’ adjusted EBIT (earnings before interest and taxes) fell to $2.6 billion, down 26% YoY. The company’s 1Q18 adjusted EBIT margin contracted to 7.2% from 9.5% a year ago. On the brighter side, strong profit from GM’s financial services arm and Chinese and South American operations contributed positively to its EBIT last quarter.

See All You Need to Know about Auto Industry Leader General Motors to learn more about GM’s business.

Negative reaction on Wall Street

Despite the company’s Q1 earnings beat, investors reacted negatively, possibly due to weaker profit margins and revenues. GM stock was trading at $37.45, down 1.9% as of 10:00 AM EST today.

During the first quarter, global sales of General Motors’ key brands Chevrolet, Buick, and Cadillac inched up 3.6%, 9.2%, and 22.5% YoY, respectively. At the same time, sales of its other brands, GMC, Holden, and Wuling, fell 2.9%, 21.9%, and 10.9% YoY.

Yesterday, GM’s direct home market peer, Ford (F), also released its 1Q18 earnings. See Lower Tax Rate Boosted Ford’s 1Q18 Revenue; Earnings Margin Fell to learn more.

Auto companies (FXD) Tesla (TSLA) and Ferrari (RACE) are slated to release their 1Q18 results next week. Please visit Market Realist’s Autos page to stay updated on analysts’ estimates for 1Q18 earnings.

Also, check out all the data we’ve added to our quote pages. Now you can get a valuation snapshot, earnings and revenue estimates, and historical data as well as dividend info. Take a look!

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