GM posts $758M Q2 loss but shows ‘resiliency’ in N.A. amid plant closures

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DETROIT — General Motors reported a $758 million second-quarter loss as the coronavirus pandemic sharply cut production and revenue by more than half.

GM said cost cutting and strong pricing allowed the automaker to nearly break even in North America despite its plants being closed for eight weeks.

GM lost $101 million in North America, compared with a gain of $3 billion in the second quarter of 2019.

“These results illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future,” CFO Dhivya Suryadevara said in a statement Wednesday.

Global revenue fell 53 percent to $16.8 billion, and its adjusted loss before interest and taxes was $536 million, compared with $3 billion a year earlier. The company burned through $8 billion in automotive operating cash but said it still had “strong” liquidity of $30.6 billion after borrowing $16 billion in March to help weather the crisis.

GM’s international regions lost $270 million in the quarter, compared with a $48 million loss a year earlier, and China equity income fell by $66 million to $169 million.

Earnings from GM Financial decreased 58 percent to $226 million.

GM’s loss of $464 million so far this year compares with net income of $4.6 billion in the first half of 2019.

Shares of GM rose 4.5 percent in premarket trading Wednesday.

“GM deserves credit for pivoting quickly and rolling out blockbuster incentive programs that arguably kept the industry afloat through its most challenging period in more than a decade,” Jessica Caldwell, Edmunds’ executive director of insights, said in a statement.

“With the worst quarter now behind GM, the company — like all automakers — is challenged to sell in a world filled with uncertainty for consumers, employees and operations.”

The company reopened its North American plants in mid-May after closing them in March to curb the spread of the coronavirus. Many dealerships around the country also closed or limited hours and services because of the pandemic.

GM’s U.S. light-vehicle sales sank 34 percent in the quarter because of the pandemic’s effect on demand and tight inventories at dealerships. Its North American plant capacity utilization rate, based on two-shifts, plunged to 36 percent in the second quarter from 104 percent a year ago.

The automaker now requires plant workers to maintain physical distancing, wear face masks and safety glasses, and participate in health questionnaires and temperature screenings.

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Saurabh Shukla

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