By Ben Klayman and Paul Lienert
DETROIT (Reuters) -General Motors Co offered a profit forecast for 2021 that disappointed analysts on Wednesday, as its third-quarter earnings were hit by a global semiconductor shortage and rising commodity prices, factors it expects to continue until late 2022.
Chief Executive Mary Barra attempted to counter the downbeat financial results by focusing on GM's plans for a wave of electric vehicles and new software-driven services. Still, shares sank 5.3% in midday trading.
GM's quarterly profit and revenue were dragged down by a drop in wholesale shipments to dealers amid the chip shortage, as well as higher commodity and logistics costs, company executives said.
Credit Suisse (SIX:CSGN) analyst Dan Levy said in a research note: "Not the beat/guide raise we were looking for."
GM said the negative impact on earnings was partially offset by strong pricing on full-size pickups and SUVs and an agreement by supplier LG Electronics to cover most of an anticipated $2 billion in costs related to the recall of the Bolt EV and Bolt EUV.
"We were able to do very well" with big trucks and SUVs, Barra said on a call with reporters. "We just can't build enough of those vehicles."
Earlier on Wednesday, the CEO said in an interview with CNBC that GM could "absolutely" catch up to Tesla (NASDAQ:TSLA) in U.S. sales of EVs by 2025.
Barra told analysts GM will provide more specifics next year on its extended EV rollout, including the introduction in January of the Chevrolet Silverado EV, the spring launch of the Cadillac Lyriq, the unveiling of a $30,000 Chevrolet mid-size crossover and the first details on a smaller, less expensive electric vehicle.
Chief Financial Officer Paul Jacobson, on the same call, said GM expects commodity prices to continue rising in the fourth quarter and in 2022. Barra said rising magnesium prices in China did not pose a significant risk to the company at this point.
Barra also said the company now expects its full-year results will approach the high end of its guidance for operating earnings in the range of $11.5 billion to $13.5 billion.
However, Barclays (LON:BARC) analyst Brian Johnson said that implied fourth-quarter earnings would be below Wall Street's consensus estimates.
GM earlier this month told investors it expects to more than double annual revenue to as much as $315 billion by 2030, fueled by growth in software-driven services and new businesses, including its majority-owned Cruise self-driving unit.
GM's market cap early on Wednesday dropped to $79.6 billion, a fraction of Tesla Inc's $1.0 trillion.
GM said adjusted earnings per share in the third quarter dropped to $1.52, from $2.83 a year earlier. Analysts had expected 96 cents a share.
Revenue dropped to $26.8 billion, from $35.5 billion in the year-ago quarter, while net margin dipped to 9% from 11.4%.
GM said a $14.3 billion year-to-year drop in adjusted automotive free cash flow reflected the impact of work-in-process inventory of vehicles produced but missing some semiconductors.
"We expect to clear the majority of our work-in-process inventory but anticipate some inventory will remain at year end," the company said.