General Motors Beats but Earnings Dip - Analyst Blog

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General Motors Co. ( GM ) reported earnings of $1.4 billion or 84 cents per share (including a net loss from special items) in the second quarter of the year, beating the Zacks Consensus Estimate by 6 cents per share. However, earnings fell marginally by 6.7% from $1.5 billion or 90 cents per share in the second quarter of 2012.

All the businesses, except International Operations, performed well during the quarter, with recoveries in Europe and South America. Revenues in the quarter grew 4.0% to $39.1 billion, which is higher than the Zacks Consensus Estimate of $38.0 billion.

Worldwide unit sales rose 4.2% to 2.49 million vehicles in the quarter. Thanks to strong sales of vehicles such as the Cadillac ATS, Chevrolet Impala and Opel Mokka. The automaker occupied a worldwide market share of 11.5% during the quarter, down from 11.6% a year-ago.

Adjusted earnings before interest and tax (EBIT) went up 9.5% to $2.3 billion from $2.1 billion in the second quarter of 2012. Operating profit fell 3.8% to $1.75 billion from $1.8 billion a year ago.

Segment Results

GM North America (GMNA) reported a 9.0% rise in revenues to $23.5 billion during the quarter. Adjusted EBIT increased 5.3% to $2.0 billion from $1.9 billion in the second quarter of 2012.

GM Europe (GME) witnessed a 6.8% fall in revenues to $5.2 billion. The region showed improvement during the quarter as it reported a narrower adjusted loss of $110 million compared with $394 million in the year-ago quarter.

GM International Operations (GMIO) results were disappointing. It reported an 11.2% decline in revenues to $5.25 billion. Adjusted EBIT plunged 63.6% to $228 million from $557 million in the comparable quarter of 2012 due to lower revenues.

GM South America (GMSA) witnessed a 4.6% increase in revenues to $4.3 billion. Adjusted EBIT increased more than threefold to $54 million in the quarter compared with $16 million in the second quarter of 2012.

GM Financial reported an impressive 71.7% rise in revenues to $836 million during the quarter. EBIT in the segment improved 17.1% to $254 million from $217 million in the year-ago quarter.

Financial Position

GM had cash and cash equivalents of $19.7 billion as of Jun 30, 2013 compared with $18.4 billion as of Dec 31, 2012. Total debt (Automotive and Financial) increased significantly to $26.7 billion as of Jun 30, 2012 from $16.1 billion as of Dec 31, 2012. Consequently, debt-to-capitalization ratio increased to 41.1% as of Jun 30, 2012 from 30.7% at the end of 2012.

During the first half of the year, the company had a net cash flow of $5.0 billion from automotive operations, down from $6.0 billion in the year-ago period. After deducting $3.8 billion and $4.1 billion of capital expenditures in the second quarter of 2013 and 2012, respectively, the company's free cash flow stood at $1.2 billion during the quarter compared with $2.0 billion a year ago.

Our Take

GM is a leading global automotive company. The company has presence in almost 120 countries and has facilities located in 30 countries. It currently retains a Zacks Rank #3 (Hold).

GM's cross town rival Ford Motor Co. ( F ) posted an impressive 50% rise in earnings per share to 45 cents in the second quarter of 2013 from 30 cents in the same quarter of 2012 (all excluding special items). With this, the company has beaten the Zacks Consensus Estimate of 37 cents. Ford's business in all the geographic regions improved during the quarter.

Few stocks that are currently performing well in the automotive industry include Volkswagen AG ( VLKAY ) with a Zacks Rank #1 (Strong Buy), and Ford and Tesla Motors ( TSLA ), each with a Zacks Rank #2 (Buy).



FORD MOTOR CO (F): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

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VOLKSWAGEN-ADR (VLKAY): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: F , GM , GME , TSLA , VLKAY

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