GM CEO says chip shortage could cost $2 billion

DETROIT — General Motors Co. on Wednesday said the global semiconductor chip shortage could shave up to US$2 billion from 2021 profit, but the U.S, automaker’s highly profitable big pickups and SUVs won’t suffer any production cuts.

After reporting a fourthquarter profit of US$2.8 billion, GM shares were down 2.4 per cent in early trading.

Chief executive Mary Barra, in a Tuesday media briefing, said GM “won’t lose any production” of its high-profit full-size pickup trucks and SUVs, although the supply of computer chips “is still a bit fluid.”

GM expects the chip shortage to trim US$1.5 billion to US$2 billion from its 2021 operating profit, or up to about 90 cents a share. Including that hit, it forecast a range of US$10 billion to US$11 billion, or US$4.50 to US$5.25 a share. Analysts had expected US$5.89 according to Refinitiv data, but that did not account for the impact of the chip shortage and analysts saw the underlying forecast as strong.

“While some may focus on a guidance, which is optically soft versus consensus due to semi shortage impact, we ultimately believe investors should look through it,” Credit Suisse analyst Dan Levy said in a research note.

The global chip shortage also will have a short-term impact on production and cash flow, the Detroit company said.

However, she added, “we’re going to be able to meet the production schedules” for the year. GM officials have repeatedly stressed they will work to protect production of its highest profit vehicles.

U.S. rival Ford Motor Co. previously said it lost some production of its high-profit, top-selling F-150 pickup truck.