Business | Autos: General Motors ekes out $294 million profit in the first quarter despite coronavirus pandemic crippling production and sales
On an adjusted basis, its pretax profit for the first quarter was $1.3 billion, down 45.9% from a year ago. GM reported a net profit of $2.1 billion in the first quarter of 2019. Its adjusted pretax earnings were $2.3 billion a year ago.
Analysts and investors are watching to see how much cash GM burned in the quarter as well as any guidance for the second quarter and beyond regarding the strength of its balance sheet and restarting U.S. production, which ceased in March.
Of the Detroit automakers, GM was expected to be best positioned to weather a crisis such as the coronavirus pandemic. For years, the automaker has aggressively cut costs and exited unprofitable markets, including Europe, to fortify its balance sheet.
GM’s first-quarter U.S. vehicle sales fell 7.1% from a year ago, the company said last month.
GM, unlike its crosstown rival Ford Motor, did not release preliminary results for the quarter in an attempt to brace investors for its results. Ford burned through $2.2 billion in cash during the first quarter and warned of a more than $5 billion adjusted pretax loss for the second quarter.
Wall Street is projecting earnings per share of 30 cents on revenue of $31.1 billion, based on Refinitiv consensus estimates. Comparing reported earnings to analyst estimates for GM’s first quarter isn’t straightforward, though, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.
Of the top U.S.-based automakers, GM has the biggest operations in China where the Covid-19 outbreak originated in late December and shuttered factories beginning in late January.
GM said at the end of March that it had about $32 billion in available cash, including $16 billion from its revolving credit facilities. The company last month signed a 364-day revolving credit agreement of $1.95 billion for exclusive use by GM Financial, the company’s auto lending arm.
Automakers across the globe have been forced to conduct rolling plant shutdowns due to Covid-19. What started as a problem in China to begin the year quickly grew to a supply-base issue and then a global pandemic that shut down U.S. facilities, which remain closed.
Urged by the United Auto Workers union, GM, Ford, and Fiat Chrysler announced plans to temporarily close their plants due to the coronavirus on March 18.
Fiat Chrysler said Tuesday it expects to begin reopening its North American operations the week of May 18.