General Motors shares up after earnings beat, company sees stronger second half

Key Points
  • General Motors beats analyst estimates for the second quarter despite a massive drop in income in China.
  • The company reports revenue of $36.1 billion.
  • Shares of GM rise more than 7% over the last 12 months and are up more than 21% since the beginning of the year.
General Motors delivers Q2 earnings beat on top and bottom lines
General Motors delivers Q2 earnings beat on top and bottom lines

General Motors shares are up 2.6% Thursday after second-quarter earnings topped analyst estimates, as sales of more profitable pickup trucks and crossovers offset weaker sales in China.

Here's what GM reported against average analysts' estimates compiled by Refinitiv:

  • Adjusted EPS: $1.64 vs. $1.44, estimated
  • Revenues: $36.1 billion vs. $35.98 billion, estimated

"We had a solid second quarter and expect the second half of the year to be stronger than the first half. Our confidence in our full-year outlook is based on our strong full-size truck rollout, other key launches and ongoing cost savings," said CFO Dhivya Suryadevara.

GM reported second-quarter net income of $2.41 billion, or $1.66 per share, compared with $2.39 billion, or $1.66 per share, a year earlier. Excluding one-time items, GM earned $1.64 per share, solidly outpacing analyst estimates of $1.44 per share.

Net revenue fell 1.9% to $36.1 billion from $36.8 billion.

In North America, the company's adjusted earnings before interest and taxes rose to $3 billion from $2.7 billion a year ago.

The company delivered 747,000 vehicles in the U.S. Crossover sales rose 17% year over year and a second-quarter record. Models like the Chevrolet Equinox and Traverse both set records while sales of every Buick crossover was up year-over-year. The GMC Acadia also had its best first half in sales ever.

In the U.S., GMC saw sales rise almost 11% to 153,000 from 138,000 a year ago.

Light-duty pickup trucks also saw their market share grow with stalwarts like the Chevy Silverado and GMC Sierra also posting double-digit gains year-over-year for the second straight quarter.

Market share in North America fell to 15.8% from 16.1% during the second quarter last year.

Vehicle sales in other parts of North America including Mexico and Canada saw sales fall 16.23%.

However, income from China dropped 60.3% over the same quarter last year, with the Detroit automaker reporting income of $235 million, down from 2018's record income of $592 million. GM China also reported sales that were down 12%, citing economic slowdowns in the country as a factor.

"We do expect China to be down year over year," Suryadevara said in an interview with CNBC.

GM China expects to benefit from about 20 new vehicle launches, the majority of which will go on sale later in the year and consist of sport utility vehicles.

GM reaffirmed its full-year forecast for earnings per share of $6.50 to $7.00 per share.

"This was a very good quarter driven by trucks, SUVs, and new products with the company facing pressures internationally especially in China," said Jeff Windau an analyst at Edward Jones.

The company is also expecting its new Corvette supercar to be a hit. It said it's increasing production of the mid-engined supercar, adding a second shift and more than 400 hourly jobs at its Bowling Green Assembly plant in Kentucky.

GM said it will have expanded the amount of highway that is compatible to its Super Cruise driver assistance feature to more than 200,000 total miles by the end of the year.

The company recently scrapped its 2019 launch of its Cruise autonomous ride-share service. The company said it will continue to expand its testing and validation miles over the balance of the year.

In April, GM said vehicle sales fell 7% in the first quarter from the same period a year ago, but that buyers were opting for the company's more expensive SUVs and pickup trucks. GM plans to launch more full-size pickups during the second half of 2019, with two new heavy-duty pickups from Chevrolet and GMC.

GM has recently cut more than 14,000 jobs at factories in the U.S. and Canada after it idled factories that produced slow-selling vehicles. The company is also shifting focus toward self-driving and electrified vehicles such as the Chevy Bolt EV.

Shares of GM have risen more than 7% over the last 12 months and are up more than 21% since the beginning of the year.

Click here for GM's full earnings release.

(Correction: An earlier version of this story misstated several numbers. GM expects to earn $6.50 to $7.00 per share in 2019. Crossover sales in the U.S. rose 17% year over year. Light-duty pickup trucks gained 3 percentage points of retail market share during the quarter. First-quarter vehicle sales fell 7% year over year.)