General Motors Co. (GM, Financial) announced its second quarter net income attributable to common stockholders of $0.2 billion, or $0.11 per diluted share, last month. Strong core operating performance during the quarter was offset by a pre-tax net loss from special items of $1.3 billion, or $(0.47) per diluted share, and costs of $1.2 billion pre-tax primarily for recall-related repairs, or $(0.44) per diluted share.
"Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches," said GM CEO Mary Barra. "We remain focused on keeping our customers at the center of all we do, and executing our plan to operate profitably in every region of the world", he added.
In the second quarter of 2013, GM’s net income attributable to common stockholders was $1.2 billion, or $0.75 per diluted share, which included a net loss from special items that reduced net income by $0.2 billion, or $(0.09) per diluted share.
Earnings before interest and tax (EBIT) adjusted was $1.4 billion and included the impact of $1.2 billion in recall-related costs and $0.2 billion in restructuring costs. This compares to the second quarter of 2013, when the company recorded EBIT-adjusted of $2.3 billion, which included a charge of $0.2 billion for recalls and $0.1 billion in restructuring costs.
Net revenue in the second quarter of 2014 was $39.6 billion, compared to $39.1 billion in the second quarter of 2013. In the first six months of 2014, revenue rose to $77 billion, up from $76 billion in the same period a year ago.
Segment Results
- GM North America reported EBIT-adjusted of $1.4 billion which included the impact of $1.0 billion in recall-related costs in the quarter. This compared with EBIT-adjusted of $2.0 billion in the second quarter of 2013, which included the impact of $0.1 billion in recall-related costs in the quarter.
- GM Europe reported an EBIT-adjusted of $(0.3) billion, which includes $0.2 billion for restructuring costs. This compares with $(0.1) billion of EBIT-adjusted in the second quarter of 2013.
- GM International Operations reported EBIT-adjusted of $0.3 billion, compared to $0.2 billion in the second quarter of 2013.
- GM South America reported EBIT-adjusted of $(0.1) billion, compared with EBIT-adjusted of $0.1 billion in the second quarter of 2013.
- GM Financial earnings before tax was $0.3 billion for the quarter, compared to $0.3 billion in the second quarter of 2013.
Other Facts:
A special charge of $0.4 billion was taken for the GM ignition switch compensation program. There is no cap on this program, but this charge is the company’s best estimate of the amounts that may be paid to claimants. Due to the unique nature of the program, this estimate contains significant uncertainty and it is possible the total cost could increase by approximately $0.2 billion.
The company is changing how it estimates future recall expense and will now accrue at the time of vehicle sale an amount that represents management’s best estimate of future recall costs in North America. As a consequence of this change, GM is taking a $0.9 billion non-cash pre-tax special charge in the second quarter for the estimated costs of future possible recalls for up to the next 10 years on 30 million GM vehicles on the road today.
Cash Flow and Liquidity
For the quarter, automotive cash flow from operating activities was $3.6 billion and automotive free cash flow adjusted was $1.9 billion. GM ended the quarter with very strong total automotive liquidity of $38.8 billion. Automotive cash and marketable securities was $28.4 billion compared with $27.0 billion for the first quarter of 2014.
