Sold! GM offloads Opel onto PSA Peugeot Citroen

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GM Q2 net drops 42% on Europe exit

Automotive News  /  July 25, 2017

DETROIT -- General Motors said its net income dropped 42 percent to $1.66 billion in the second quarter, primarily because of the pending sale and restructuring of its European operations.

The company recorded a loss of $770 million from discontinued operations, which include the sale of its Opel and Vauxhall operations to PSA Group of Europe. Excluding those costs, the company recorded a profit of $2.43 billion, down 11 percent from a record second quarter in 2016.

Revenue from continuing operations fell 1.1 percent to $37 billion, mostly due to lower volumes.

In North America, earnings before interest and taxes declined 7.2 percent to $3.48 billion, also due to a decline in sales.

GM's continuing operations topped Wall Street estimates for a ninth consecutive quarter. The earnings were equal to $1.89 a share, compared with a projection of $1.69.

"Disciplined and relentless focus on improving our business performance led to a strong quarter and very solid first half of the year," GM CEO Mary Barra said in a statement. "We will continue transforming GM to capitalize on growth opportunities and deliver even more value for our shareholders."

GM delivered 2.3 million vehicles in the second quarter, down slightly from about 2.4 million a year ago.

Lower production

GM CFO Chuck Stevens said the company expects to build 150,000 fewer vehicles in the second half of the year than in the first. That would amount to a 15 percent decline versus the second half of 2016, when it built 1.9 million vehicles, according to estimates from the AutomotiveNewsDataCenter.

Stevens said light-duty pickups account for roughly 40,000 of the 150,000 lost units, as GM shuts down the plants that build them to retool for an upcoming redesign. The company has scheduled a total of at least 13 weeks of product launch-related downtime at its pickup and crossover plants in the second half of the year.

GM has said it deliberately built up stocks to prepare for several plant shutdowns planned this year for retooling. But instead of the 90-day supply it had targeted at mid-year, it had a 105-day supply as of June 30.

Stevens said the company remains on track to reach a roughly 70-day supply by year’s end.

Stevens said the company has not changed its guidance for the year that earnings would be $6 to $6.50 per share. First-half earnings were equal to $3.64 per share.

Global results

GM’s international operations, which include China, posted pretax earnings of $340 million, 79 percent more than the same period a year ago. It reduced losses in South America by 81 percent, to $23 million.

The company’s financial arm recorded net income of $50 million in the second quarter, down $203 million from a year ago due to a $209 million loss from discontinued operations. Without that loss, GM Financial would have recorded net income of $259 million, up 25 percent from a year ago.