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GM warns chip shortage could cut 2021 earnings by up to $2 billion


General Motors on Wednesday reported fourth-quarter earnings that simply beat Wall Street expectations, however the firm warned a world semiconductor chip shortage could cut its earnings by up to $2 billion this 12 months.

Automakers and elements suppliers started warning of a semiconductor shortage late final 12 months after demand for automobiles rebounded stronger than anticipated following a two-month shutdown of manufacturing crops due to the coronavirus pandemic. GM has already quickly closed automotive and crossover crops in Kansas, Canada, Mexico by mid-March due to the shortage. It additionally has cut manufacturing in South Korea.

GM’s crosstown rival, Ford Motor, final week stated the shortage could decrease its earnings by $1 billion to $2.5 billion this 12 months. GM stated the shortage would value it between $1.5 billion and $2 billion.

GM’s shares fell by nearly 2% in premarket buying and selling.

Here’s what GM reported versus what Wall Street anticipated, primarily based on common analysts estimates compiled by Refinitiv.

  • Adjusted EPS: $1.93, vs. $1.64 anticipated, primarily based on common analysts’ estimates compiled by Refinitiv.
  • Revenue: $37.5 billion, vs. $36.12 billion anticipated.

The firm stated it expects to earn between $10 billion and $11 billion, or $4.50 and $5.25 per share, in adjusted pretax earnings this 12 months. It initiatives adjusted free money circulation of between $1 billion to $2 billion for its automotive division in 2021. The forecasts issue within the potential impression of the semiconductor shortage, together with successful of between $1.5 billion and $2.5 billion to its free money circulation.

GM’s fourth-quarter earnings simply beat outcomes from a 12 months earlier, which have been negatively impacted by a U.S. labor strike that shut down car manufacturing in the course of the fourth quarter of 2020.

On an unadjusted foundation, internet revenue was $2.85 billion for the fourth quarter in contrast with a lack of $194 million. The automaker reported pretax adjusted earnings of $3.7 billion for the fourth quarter, up from $105 million a 12 months earlier.

The automaker reported pretax adjusted earnings of $5.3 billion, or $2.83 earnings per share, for the third quarter, whereas saying the fourth quarter could be weaker due to seasonality.

The firm expects to spend between $9 billion and $10 billion in 2021. That consists of plans to speed up its all-electric and autonomous car improvement and rollouts in addition to deferred spending from final 12 months due to the coronavirus pandemic. GM beforehand stated its annual capital expenditure prices would exceed $7 billion by a minimum of 2023.

This story is creating. Please examine again for updates.



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