It was an up-and-down second quarter financially for the country’s largest automakers.
General Motors Co. topped Wall Street estimates, while Ford Motor Co. watched its net income drop by 5.3% but maintained enough optimism to say it expects to bounce back in the second half of 2024.
Not so much for Stellantis, which saw its net profit fall by nearly half in the first half of the year compared to 2023, a slip that came amid lower vehicle sales.
General Motors Co. announced its second-quarter net income was up 14% year-over-year to $2.9 billion on revenue of $47.9 billion, up 7%.
GM increased its guidance for the year to adjusted earnings in the range of $13 billion to $15 billion, up from $12.5 billion to $14.5 billion. GM also increased its adjusted automotive free cash flow to a range of $9.5 billion to $11.5 billion, up from $8.5 billion to $10.5 billion, The Detroit News reported. The financial guidance includes capital spending of $10.5 billion to $11.5 billion.
The automaker expects its net income for the year will be between $10 billion and $11.4 billion, slightly below the $10.1 billion to $11.5 billion previously forecasted.According to The News, GM reported adjusted earnings before interest and taxes of $4.4 billion, up 37% year-over-year. GM’s adjusted earnings per share of $3.06 was above the average Wall Street estimate of $2.72. GM’s revenue also beat the Street’s average estimate of $45.3 billion. GM’s net income margin for the quarter was 6.1%, up from 5.7%.
GM CFO Paul Jacobson said the automaker is reducing its inventories in China while aligning its production with demand and reducing costs.
“But it’s clear that the steps that we’ve taken, while significant, have not been enough,” Jacobson told The News. “So we’re working closely with our JV partner to restructure the business to make it profitable and sustainable, while ensuring that it doesn’t require incremental capital.””It was truly a great first half,” GM CEO Mary Barra wrote in a letter to shareholders. “And we have the products, discipline and strategies to drive future success.”
Ford, meanwhile, had the No. 1 gas, No. 2 electric and No. 3 hybrid vehicle brand in the U.S. and the company remains confident in full-year 2024 results, including increasing effectiveness generating cash, Ford officials said in reporting the automaker’s second-quarter financials.
Ford’s second-quarter revenue was $47.8 billion, an increase of 6% year-over-year on a slight increase in wholesales. Company net income was $1.8 billion and adjusted earnings before interest and taxes, or EBIT, was $2.8 billion, according to a release posted on the companys website. Profitability was affected by an increase in warranty reserves, though efforts to lift the quality of new products are starting to pay off, with positive implications for customer satisfaction and Ford’s operating performance.
J.D. Power last month reported that Ford jumped 14 spots to No. 9 in the analytics company’s 2024 U.S. Initial Quality Study. Bronco Sport was named the best small SUV for initial quality; Ford’s Lincoln luxury brand was recognized for enhanced performance.
“Our own evaluations are showing similar quality gains,” said Ford Vice Chair and CFO John Lawler, “with declines in the number of incidents during the critical first three months in service, what the industry calls ‘3MIS.’”
Product launch and 3MIS data are leading indicators of future warranty costs, with today’s quality improvements typically showing up in financial results down the road.
“We still have lots of work ahead of us to raise quality and reduce costs and complexity, but the team is committed and we’re heading in the right direction,” said Lawler.
Operating cash flow in the second quarter was $5.5 billion and adjusted free cash flow was $3.2 billion. At quarter-end, Ford’s continually strong balance sheet had close to $27 billion in cash and about $45 billion in liquidity – supporting disciplined allocation of capital to invest in both long-term growth and returns to shareholders.
The company today declared a third-quarter regular dividend of 15 cents per share, payable Sept. 3 to shareholders of record at the close of business on Aug. 7.
Stellantis reported earning $6.1 billion, down 48% for the first six months, on net revenues of $92.2 billion, which was off 14% compared to a year earlier.
The company reported adjusted operating income of $9.2 billion — down by $6.2 billion compared to 2023. That’s a 10% group-wide margin compared to 14.4% a year prior.
In the company’s earnings release, Stellantis officials said they had already sought to reduce materials, workforce, and logistics costs, and were taking other “decisive actions to address operating challenges.” That was particularly true in North America, they said, where vehicle shipments were down 18% for the first half, while net revenues were off 16%, and adjusted operating income for the region fell by 46%.“The company’s performance in the first half of 2024 fell short of our expectations, reflecting both a challenging industry context as well as our own operational issues,” Stellantis CEO Carlos Tavares said in a statement. “While corrective actions were needed and are being taken to address these issues, we also have initiated an exciting product blitz, with no fewer than 20 new vehicles launching this year, and with that brings bigger opportunities when we execute well. We have significant work to do, especially in North America, to maximize our long-term potential.”
