GM Q2 net income more than doubles to $2.87 billion

[Cmicasa the Great]

 

• GM North America sets records for EBIT-adjusted of $3.6 billion, 12.1 percent margin

DETROIT – General Motors Co. (NYSE: GM) today announced strong second-quarter net income to common stockholders of $2.9 billion, up 157 percent compared to $1.1 billion in the second quarter of 2015. Earnings per share (EPS) diluted was a strong $1.81, compared to $0.67 in the second quarter a year ago.

EPS diluted-adjusted was a record at $1.86, up 44 percent compared to $1.29 in the second quarter of 2015.

The company reported records for earnings before interest and tax (EBIT) adjusted of $3.9 billion and EBIT-adjusted margin of 9.3 percent. These compare to EBIT-adjusted of $2.9 billion and EBIT-adjusted margin of 7.5 percent in the second quarter of 2015, which included the impact of $0.3 billion restructuring costs.

“This was an outstanding quarter for GM,” said Chairman and CEO Mary Barra. “Our results were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide. We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”

Net revenue of $42.4 billion was a record, compared to $38.2 billion in the second quarter of 2015. Holding exchange rates constant, net revenue was $5.0 billion higher than the second quarter of 2015.

More at PRESS RELEASE

[G. David Felt]

Awesome!         

[El Kabong]

Very good news. Looks like the Camaro is earning it's keep after all.

Edited July 21, 2016 by El Kabong

[hyperv6]

I think what many have missed is GM has cut lower and non money making models and have dropped in sales but now are making more money per unit sold. 

What is key moving forward here is that it is expected that the Automotive market is going to slow to stop growing so the only way to make more money is to make more per unit. GM has carefully improved cost and has cut models that make little to no money like Fleet Sales etc. 

 

I see people in a panic with the monthly sales numbers declining but they fail to associate it with the fact that fleet and some of the models cut may have made money but little if any. 

 

Anymore it not just about making any money but about making good money on everything sold. Profitability is more important now than just volume alone. 

Note GM stock has been gaining traction again and the market is watching them as they are making all the right moves for where the market is expected to go. 

 

To win at this game it is about more than just selling the most cars it is about making the most money per car sold possible. As the market slips into low growth the winners are who have their cost strutured right and those who are getting the right prices on each model sold. Large rebates and low profits are no longer acceptable. 

[El Kabong]

Speaking for myself and what I've seen in this place in particular, I don't think that folks were especially worried about the decline in sales numbers as much as they were wondering if GM would be able to translate this strategy into increased profitability. It appears that they can. Now, as a GM fan I confess that I would be delighted to see quarterly profits greater than those of its competition while still holding the overall sales lead. But that's more a question of degrees of success as opposed to success versus failure.

[hyperv6]

Speaking for myself and what I've seen in this place in particular, I don't think that folks were especially worried about the decline in sales numbers as much as they were wondering if GM would be able to translate this strategy into increased profitability. It appears that they can. Now, as a GM fan I confess that I would be delighted to see quarterly profits greater than those of its competition while still holding the overall sales lead. But that's more a question of degrees of success as opposed to success versus failure.

 

It is a big topic at other GM web sites and many like to predict doom and gloom. 

Many just equate selling a lot of vehicles is success and fail to realize volume is only part of this and profits are even more important.

I find many are critical over the cutting of Fleet sales that are generally low or no profit and think GM has made a major mistake by take some of them out. Then they see the monthly drops this year but fail to rationalize that the drops will continue for a while when compared to last years sales and last months sales. You will have drops when you kill off low and no profit sales in fleets. 

 

This is what I have also pointed out with Cadillac. Volume is a part of it but how much profit per vehicle is where the luxury segment is won and lost. Cadillac may never sell as many cars as Benz but they can be much more profitable and be a big bonus to GM. Cadillac does not have to do it all like Benz does in Europe as it has Chevy and Buick to also fill in here for volume.

These are things that you have to see the big picture to grasp and unfortunately many do not look at anything but what is in front of them.

This is also why we will see GM pick and choose models carefully. As segments will not grow but you can make more money per model sold. Come models will not come to market because another model will be more profitable. Or a model may die as the profits are there but should or could be higher and will be replaced with a more profitable model. 

 

This goes back to the old saying work smarter not harder. . 

[G. David Felt]

+1 Hyper, I totally agree, GM has Chevy, Buick and GMC to fill in all the low bits that MB is doing with their single name. Cadillac can be much lower volume with much higher profits and focus on quality over quantity with proper profit margins.

[hyperv6]

Yes they will focus on profits and then they will play with volume. They want enough volume to max profits but they want to control volume to help build image. They do not want to be a luxury car you see just anywhere driven by just anyone but they want to mine all the profit they can. 

Much of the volume will be SUV and CUV models., 

[Drew Dowdell]

Much of Benz's profits come from the fact that most of their volume is tarted up taxi cabs selling at a premium to gullible buyers in the US.  I doubt they're make much, if any money, with these weird one-offs like the GLE Coupe.  At least when you buy a CTS, you know it's not being used as a Yellow cab somewhere else en masse.  Even the Escalade is based on a Chevy that is considered best in class with an 80 year history. 

[smk4565]

Crossovers and trucks make money.  As long as those keep selling the money will keep rolling in. 

[hyperv6]

Much of Benz's profits come from the fact that most of their volume is tarted up taxi cabs selling at a premium to gullible buyers in the US.  I doubt they're make much, if any money, with these weird one-offs like the GLE Coupe.  At least when you buy a CTS, you know it's not being used as a Yellow cab somewhere else en masse.  Even the Escalade is based on a Chevy that is considered best in class with an 80 year history. 

 

Well like them or not they are premium cars that hold a well crafted image that is enough to get people to pay high prices to be seen in them. The Luxury segment is as profitable as any truck or SUV segment but they can do it at much lower Volumes. 

Now mix the CUV and SUV with the profits from a luxury segment and it is like printing money. 

 

But you even know Benz makes a wide range of cars from basic to some of the most advanced in the world. I can not take that away from them even if i am not a fan. 

In this country we only see the mid to upper cars and not the cheap ones they send to Albanian. 

[smk4565]

Daimler made $2.6 billion in profit last quarter.  Mercedes cars make money, and they are on pace to sell 2 million cars this year, and only 350,000 or so will be in the USA. So I doubt most of that is coming from American car sales.  We are only 20% of their volume.  Daimler probably makes a nice profit on Freightliner trucks and Detroit engines and transmissions sold in the USA though.  The S-class is where the money is really printed from a global standpoint.

[Cmicasa the Great]

Sales are no as relevant as some make it out to be.. Mercedes has 16 models.. Audi about 14..  BMW, 12. They should be outselling Cadillac's 6 models. We all kno that a great deal of BMW and Audi sales are BS in terms of luxury. Only in the U.S. are they truly conveyed as over the top luxury in fact. The 3Series is a sales king along with the 5Series because of their massive fleet sales in Europe.. often being used as cabs, cop cars etc. GM has Opel for that. If U really looked at the numbers.. GM's Luxury brands account for somewhere around 2 Million PREMIUM sales. Putting Caddy at 500K would sweeten that deal. Even better is that when U get right down to it... adding more vehicles to Cadillac volume really revolves around the $33K+ range.. not under. 

We all kno that a great deal of BMW and Audi sales are BS in terms of luxury. Only in the U.S. are they truly conveyed as over the top luxury in fact. The 3Series is a sales king along with the 5Series because of their massive fleet sales in Europe.. often being used as cabs, cop cars etc. GM has Opel for that. If U really looked at the numbers.. GM's Luxury brands account for somewhere around 2 Million PREMIUM sales. Putting Caddy at 500K would sweeten that deal. Even better is that when U get right down to it... adding more vehicles to Cadillac volume really revolves around the $33K+ range.. not under. 

[daves87rs]

Noticed very little rebates/discounts on many products......a good sign....

[Cmicasa the Great]

Ford just posted a $1.97 Billion net profit. Looks like we can see that Fleet vs Retail has its drawbacks

[El Kabong]

Yup. Sounds like GM can hold the line on August clearouts.

[hyperv6]

I saw the Ford profits and GM on a graph. GM holds a good edge. 

Ford is worried as the market has peaked and they are already heavy on rebates and incentives now. With them holding more debt and lower profits per unit sold it could hurt them in the future. Their stock took a good dip. 

 

GM has made the right moves here and lets just hope it is enough to handle the slower sales.