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General Motors posts smaller-than-expected Covid-19 hit in second quarter

GM did not provide a earnings forecast for the year, but said it ended the second quarter with $30.6 billion in cash

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General Motors | Automobile | Coronavirus

Reuters 

Employees work on the assembly line at the General Motors plant in Talegaon, about 118 km (73 miles) from Mumbai. Photo: REUTERS
Employees work on the assembly line at the General Motors plant | Photo: REUTERS

By Nick Carey and Ben Klayman

(Reuters) - Co on Wednesday posted a smaller-than-expected second-quarter loss, as high-margin pickup truck sales and aggressive cost-cutting helped mitigate the impact of a forced shutdown to slow the spread of the that left its North American plants idled until May 18.

The better-than-expected sent the No. 1 U.S. automaker's shares up 3.8% in premarket trading.

"These illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future," Chief Financial Officer Dhivya Suryadevara said in a statement.

During the quarter GM said its retail sales showed signs of recovery, improving from a drop of 35% in April versus the same month in 2019 to a decline of 20% in May and June.

GM did not provide an earnings forecast for the year but said it ended the second quarter with $30.6 billion in cash.

Suryadevara told reporters that if the U.S. economy continues to recover, GM should generate cash flow of between $7 billion and $9 billion during the second half of the year.

She said the automaker should repay its $16 billion revolving credit line by the end of the year, an action that again depends on a continued economic recovery.

Spiking cases across southern and southwestern U.S. states have left that recovery in doubt.

Weekly jobless claims numbers from the Labor Department released last week showed the number of Americans filing for unemployment benefits unexpectedly rose for the first time in nearly four months, suggesting the labor market was stalling amid the resurgence in new cases and depressed demand.

GM said it was "working all avenues" to boost U.S. dealer inventories and all of its U.S. full-size pickup truck and full-size SUV plants are back at three shifts.

Nearly all of its other plants are now working at pre-pandemic shift levels.

GM also said it would increase production of light-duty full-size pickups at its Fort Wayne assembly plant by about 1,000 units a month beginning Sept 1.

GM reported a net loss for the quarter of $758 million, or 56 cents per share, down from a profit of $2.4 billion, or $1.66 per share, a year earlier. On an adjusted basis, the loss was $806 million.

Excluding one-time items, GM reported a loss of 50 cents per share while analysts had expected a loss of $1.77 per share.

 

(Reporting by Nick Carey and Ben Klayman; editing by Jason Neely and Steve Orlofsky)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, July 29 2020. 18:54 IST
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