Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GM outlook doesn't impress, sees chip shortage continuing; shares sink

Stock MarketsOct 27, 2021 12:13PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. Picture taken March 16, 2021. REUTERS/Rebecca Cook/File Photo

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.

GM outlook doesn't impress, sees chip shortage continuing; shares sink
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email