- General Motors co. missed analysts' forecasts for the latest quarter but raised its full-year guidance as rich margins on pickups vied with nagging production cuts at its North American factories from a global semiconductor shortage.
Soaring new vehicle prices on high-volume pickups couldn't make up for supply chain issues in the second quarter and expenses related to batteries on its Chevrolet Bolt electric vehicle. GM remained optimistic about its full-year earnings prospects, boosting its 2021 forecast Wednesday after signaling it would hit the high-end of its previous guidance in June.
The Detroit automaker now expects adjusted earnings before interest and taxes of $11.5 billion to $13 billion for all of 2021, which translates to adjusted earnings of $5.40 to $6.40 per share. That compares to an earlier projection of $10 billion to $11 billion or $4.50 to $5.25 a share.
The shares of GM fell 2.9% in premarket trading to $56.20 from 7: 45 a.m. today in New York City. The stock gained 39% as of the close of trading on Tuesday.
Record transaction prices for new vehicles pumped up profits, even as GM and other automakers struggled to keep plants open due to shortfalls in chip supplies. The company's average new vehicle transaction price in July rose 9% from a year earlier - almost double the industry average of 4.8% - to an estimated $44,749, according to market researcher TrueCar.
But it hasn't been able to make the most of this uptick in pricing because of limited vehicle inventories. The automaker reported adjusted earnings per share of $1.97 for the second quarter, below the analyst consensus forecast of $2.08 a share that has been compiled by Bloomberg. That compares to a 50 cents a share loss posted in the first quarter - year after the pandemic at least and 13 cents a share archrival Ford Motor Co. for the latest quarter.
GM said it spent $800 million on recall issued late last month for almost 69,000 Chevy Bolts due to the risk of fires from defective batteries made by South Korea's LG Chem Ltd.