GM affirms 2022 profit outlook
DETROIT: GENERAL Motors (GM) on Tuesday reaffirmed its full-year profit outlook on an expected surge in demand and said it was curbing spending and hiring ahead of a potential economic slowdown, but a 40 per cent drop in its quarterly net income disappointed, sending shares lower in premarket trading.
The Detroit automaker’s net income fell 40 per cent in the second quarter from a year earlier due to supply-chain snarls, including a global semiconductor chip shortage, sending its shares down 1.2 per cent in premarket trading.
In a shareholder let er, chief executive mary bar ra said the company was “already taking proactive steps to manage costs and cash flows” ahead of a possible slowdown in the economy.
“We have also modeled many down turn scenarios and we are prepared to take deliberate action when and if necessary,” she added.
The company has taken steps to offset a surge in inflation and other challenges, Chief Financial Officer Paul Jacobson said.
“We’ve slowed down some hiring (and) we have put off some costs and expenses we were going to make going into this year to try to balance that out with the pressure we’ve seen from both inflation as well as some of the other supply-chain challenges,” Jacob son told reporter son a conference call, adding that GM was not contemplating layoffs.
Nevertheless, Jacobson said GM sees a lot of pent-up demand for its vehicles, in marked contrast with us retail giant walmartinc’s warning on monday that consumers were cu ting discretionary purchases as it slashed its profit forecast.
The auto maker reaffirmed its forecast of full-year net income of $9.6 billion to $11.2 billion, and adjusted earnings before interest and taxes (EBIT) of $13 billion to $15 billion, while expecting global deliveries to be up sharply in the second half of the year.
Second-quarter net income was $1.7 billion, or $1.14 a share, down 40 per cent from $2.8 billion, or $1.90 a share, a year earlier. Analysts had expected $1.20 a share, according to Refinitiv data. Revenue rose nearly 5 per cent to $35.8 billion.