General Motors has reported a 40% year-over-year decline in net income even as its revenue rose 4.7% in the second quarter.
But the automaker remains bullish that stronger results are possible in the second half of the year.
“This confidence comes from our expectation that GM global production and wholesale deliveries will be up sharply in the second half,” CEO Mary Barra said in a letter to shareholders. "It is clear we are operating in a dynamic market that presents both challenges and opportunities for our company, and we will continue to rise to them."
GM's net income declined to $1.7 billion in the second quarter as the automaker faced off against a global microchip shortage. Adjusted earnings before interest and taxes dropped 43% to $2.3 billion and revenue rose to $35.8 billion, GM noted in a statement.
The company has reduced its discretionary spending and limited hiring to critical needs and positions that support the automaker’s growth, Barra said. However, the automaker is not considering layoffs at this time, reported CFO Paul Jacobson.
GM also reported that it has partnered with Livent Corp. and LG Chem to secure lithium and cathode material used in electric vehicle batteries. GM plans to deliver $90 billion in EV revenue annually by 2030.
The automaker also expects to meet its current forecast for full-year adjusted earnings before interest and taxes of $13 billion to $15 billion. It earned $6.4 billion in the first half of 2022.
Still, its North American profit fell 21% to $2.3 billion in the second quarter.
The automaker’s U.S. light-vehicle sales fell 15%, which the company attributes to parts shortages that slowed production. GM has reported having around 95,000 vehicles awaiting parts. The company expected to deliver all these vehicles to dealers by year’s end.
GM expects full-year production to exceed 2021 production levels by 25% to 30%.
“The second half should be considerably better than the first, which is in line with our expectations coming into the year,” Jacobson said.
In other positive news, the company’s fleet mix returned to pre-pandemic levels, hitting 22% of overall sales, up from 14% from 2021.
GM’s adjusted profit margin globally slipped by 6.6% in the second quarter.
The company’s international operations earned $209 million, up from $15 million in 2021, despite an $87 million loss in China.
GM Financial earnings fell 30% to $1.1 billion.