Plant closings send GM to 2Q loss, but signs of improvement

The Detroit automaker had to close its plants from March 18 to May 18 due to the coronavirus, but production didn't resume fast enough to stem the losses. GM counts revenue when vehicles are shipped from its factories, so it had little money coming in for seven weeks in April and May. The company reported a loss of 50 cents per share excluding one-time items.

Even though General Motors was able to reopen its US factories for the last half of the second quarter, the company still lost USD 806 million in the three months between April and June. The Detroit automaker had to close its plants from March 18 to May 18 due to the coronavirus, but production didn't resume fast enough to stem the losses.

GM counts revenue when vehicles are shipped from its factories, so it had little money coming in for seven weeks in April and May. The company reported a loss of 50 cents per share excluding one-time items. That was better than Wall Street expected, with analysts polled by FactSet predicting a USD 1.77 per-share loss.

Revenue was cut in half to USD 16.78 billion, and that also beat estimates. The company burned through more than USD 9 billion during the quarter including spending on operations and capital.

Sales in the US, GM's most lucrative market, fell 34 per cent for the quarter, even though executives said there is pent-up demand for vehicles, especially pickup trucks. GM has put many of its truck plants on three shifts as it tries to make up for lost production.

Still, Chief Financial Officer Dhivya Suryadevara said the company nearly reached break-even earnings before taxes even in a challenging quarter. "These results illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future," Suryadevara said in a prepared statement.

The Detroit automaker had to close its plants from March 18 to May 18 due to the coronavirus, but production didn't resume fast enough to hold off a net loss. Like other automakers, GM counts revenue when vehicles are shipped from its factories, so it had little money coming in for seven weeks in April and May.

The company reported a loss of 50 cents per share excluding one-time items. That was better than Wall Street expected, with analysts polled by FactSet predicting a USD 1.77 per-share loss. Revenue was cut in half to USD16.8 billion, but that also beat estimates.

The company burned through more than USD9 billion during the quarter including spending on operations and capital. Sales in the US, GM's most lucrative market, fell 34 per cent for the quarter, even though executives said there is pent-up demand for vehicles, especially pickup trucks.

GM has put many of its truck plants on three shifts as it tries to make up for lost production. The whole auto industry was expected to struggle this quarter as the pandemic cut into sales.

Electric vehicle company Tesla may wind up the lone exception because it managed to post a USD 104 million profit. But Japan's struggling Nissan reported a USD 2.7 billion loss (285.6 billion yen) for the period.

GM said sales are showing signs of improvement and in some areas, such as pickup trucks, sales have been constrained by low inventory levels as plants came back on line. "The company is working all avenues to increase US dealer stocks and has restarted all US truck and full-size SUV plants to three shifts, and nearly all other plants to pre-pandemic shift levels," GM said.

US sales were down 35 per cent in April, but that improved to around 20 per cent year over year in May and June, the company said. The whole auto industry was expected to struggle this quarter as the pandemic cut into sales.

Electric vehicle company Tesla may wind up the lone exception because it managed to post a USD 104 million profit. But Japan's struggling Nissan reported a USD 2.7 billion loss (285.6 billion yen) for the period.

GM's shares rose more than 3 per cent in trading before Wednesday's opening bell..

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)