GM swings to an $800 million loss as coronavirus shuttered factories and devastated sales in the second quarter

Earnings

General Motors Chairman and CEO Mary Barra on April 1, 2020 tours one of the company’s facilities in Warren, Michigan that will produce Level 1 face masks.

GM

General Motors is set to report its second-quarter earnings before the bell on Wednesday as the automaker attempts to recover from the coronavirus pandemic that’s shuttered factories and devastated sales.

The second quarter is expected to be “likely to be the toughest in modern history” for the automotive industry, according to Bank of America Merrill Lynch analyst John Murphy, noting that companies “grappled with close to a zero revenue environment for a few months.”

Other investors and industry executives have called the second quarter “unprecedented,” and likely the worst three months of the year.

Here’s what Wall Street is expecting, based on average analysts estimates compiled by Refinitive.

  • EPS: A loss of $1.77 per share.
  • Revenue: $17.3 billion expected.

Analysts and investors are watching to see how much cash GM burned in the quarter as well as any guidance for the remainder of the year and beyond regarding the strength of its balance sheet and U.S. production, which restarted in mid-May following a roughly two-month shutdown.

GM said it expected to spend between $7 billion and $9 billion in the second quarter, however that was partially contingent on how much U.S. sales fell. That estimate is based on 8 million to 10 million sales a month, which only occurred in April.

Of the Detroit automakers, GM was expected to be best positioned to weather a crisis as big as the coronavirus pandemic. For years, the automaker has aggressively cut costs and exited unprofitable markets, including Europe, to fortify its balance sheet.

GM’s second-quarter U.S. vehicle sales fell 34% from a year ago, the company said earlier this month. That was in-line with the industry.

GM reported second-quarter net income last year of $2.4 billion on new revenue of $36.1 billion. 

This story is developing. Please check back for updates.

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