General Motors Co. (GM, Financial) released its first-quarter results before the market opened on May 6. Despite disruptions related to the Covid-19 virus, both the top and bottom line surpassed Wall Street’s projections.
Earnings and revenue
For the first quarter, the Detroit-based automaker posted earnings of 62 cents per share, which reflected a decline of 56% from the prior-year quarter. Revenue of $32.7 billion declined 6.2% from a year ago. Analysts had anticipated earnings of 30 cents per share on $31.1 billion in revenue.
Performance in North America and China
In North America, General Motors reported earnings of $2.2 billion. This was more than the $1.9 billion reported last year. Strong sales of light-duty pickups and full-size SUVs helped the segment’s overall results during the quarter. Unfortunately, the company witnessed production stoppage in the U.S., which affected results.
The carmaker will resume production in U.S. and Canadian factories that were shut down due the coronavirus starting on May 18.
The company posted an adjusted loss of $0.6 billion in China, primarily driven by the pandemic, which was only partially offset by its cost-saving initiatives. Quarterly sales in China dropped 43%. This was followed by double-digit sales growth in the month of April, which means the company is bouncing back in China.
Investment in Electric Vehicles
General Motors said its investment in developing electric vehicles and autonomous cars has not been affected by the ongoing pandemic. The automaker is planning to spend as much as $1.5 billion in the second quarter on these initiatives, but it did not provide its full-year projected expenditure.
Efforts to preserve liquidity
At the end of the quarter, the company had automotive liquidity of $33.4 billion, which included $16 billion borrowed under the revolving credit facility. In addition, the company has temporarily halted its share repurchase program and suspended annual dividends.
“We are focused on preserving liquidity and taking the right actions today to make the company stronger and more competitive in the long term as we navigate through these unprecedented times,” Chief Financial Officer Dhivya Suryadevara said.
Guidance
The company did not provide a 2020 profit guidance as the full impact of the Covid-19 virus is currently unknown.
Disclosure: I do not hold any positions in the stocks mentioned.
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