GM Sees Profits Fall as Tariff Impact Hits
YOUNGSTOWN, Ohio – General Motors Co. reported second-quarter income of $2.4 billion, a 2.8% drop from a year ago, as the cost of steel and aluminum has risen, the company announced Wednesday morning.
“Recent and significant increases in commodity costs and unfavorable foreign exchange impact of the Argentine peso and Brazilian real have negatively affected business expectations,” the company said in its quarterly earnings report, noting that it expects the cost increases to hold for the rest of 2018.
As a result, it adjusted its full-year outlook to $5.14 diluted earnings per share, down from $6, and an adjusted free-cash flow of $4 billion.
According to The Detroit News, the increase of both domestic and international steel costs was greater than GM expected.
The increase in costs was most noticeable in GM’s North America segment, where it made $2.7 billion in the quarter, down from 2017’s $3.5 billion. Internationally, profits totaled $100 million, down from last year’s $300 million.
GM’s automation division, GM Cruise, was even with last year’s losses of $200 million, while GM Financial reported earnings of $500 million, up from 2017’s $400 million.
“We face significant external challenges, but delivered solid results in the quarter,” said Mary Barra, GM chairman and CEO, in a statement. “The fundamentals of our business are strong and we remain focused on our plan – delivering great vehicles, developing technologies to transform personal mobility and creating long-term shareholder value.”
The company saw vehicle sales increase 4.6% in the quarter as 758,000 new cars, trucks and SUVs were sold. Increased sales helped reduce GM’s inventory by 193,000, an 83-day supply compared to 105 days a year ago.
GM also announced a partnership with Honda to develop advanced battery components, which the Japanese automaker will source from GM.
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