General Motors reports strong earnings in Q2 compared to a year ago.

• EPS of $0.67; EPS adjusted for special items of $1.29 up 122 percent
• North America achieves quarterly records for EBIT-adjusted of $2.8 billion and
  EBIT-adjusted margin of 10.5 percent
• Company reaffirms 2015 outlook for improved EBIT-adjusted and EBIT-adjusted margin, compared to 2014

General Motors Co. (NYSE: GM) today reported strong earnings growth for the second quarter with net income attributable to common stockholders of $1.1 billion, or $0.67 per diluted share, which included a $1.1 billion loss from special items before tax, or $(0.62) per diluted share. 

Earnings before interest and taxes (EBIT) adjusted increased to $2.9 billion and EBIT-adjusted margin grew to 7.5 percent.

“The first two quarters of the year were strong as we fully capitalized on a robust North American industry and maintained our strength in China, despite the challenging conditions in that market,” said GM CEO Mary Barra. “We said our goal was to improve our earnings and margins this year, and we are on-plan. Consistent with that, we believe our results in the second half of the year will be even better than the first half, and we’re confident we will meet our 2016 targets.”

Special items before tax in the quarter included $0.6 billion related to a previously announced currency devaluation in Venezuela, $0.4 billion for asset impairments primarily for GM Thailand, and $0.1 billion for an adjustment to the estimated cost of the ignition switch compensation program.

Net revenue in the second quarter of 2015 was $38.2 billion, compared to $39.6 billion in the second quarter of 2014. 

The change in revenue is more than attributed to a negative net foreign currency exchange impact. Holding exchange rates constant, net revenue was $0.9 billion higher than the second quarter of 2014.

“Our plan is generating results and giving us momentum,” said Chuck Stevens, executive vice president and chief financial officer. 

“Record margins in North America and strong margins in China produced a second quarter that demonstrates the earnings power of this company. We expect continued strong performance in these key markets.”

GM Results Overview (in billions except for per share amounts and percentages)

	Q2 2015	Q2 2014
Revenue	$38.2	$39.6
Net income attributable to common stockholders	$1.1	$0.2
Earnings per share (EPS) diluted	$0.67	$0.11
Impact of special items on EPS diluted	$(0.62)	$(0.47)
EPS diluted – adjusted	$1.29	$0.58
EBIT-adjusted	$2.9	$1.4
% EBIT-adjusted margin	7.5	3.4
Automotive net cash flow from operating activities	$5.1	$3.6
Adjusted automotive free cash flow	$3.3	$1.9
% Return on Invested Capital (ROIC)	23.4	14.7

Segment EBIT-adjusted Results

• GM North America reported EBIT-adjusted of $2.8 billion with an EBIT-adjusted margin of 10.5 percent. These results included the impact of $0.2 billion for restructuring costs. This compared with EBIT-adjusted of $1.4 billion in the second quarter of 2014, which included the impact of recall-related costs of $1.0 billion.
• GM Europe reported EBIT-adjusted of $(0.0) billion. This compares with EBIT-adjusted of $(0.3) billion in the second quarter of 2014, which included $0.2 billion for restructuring costs. 
• GM International Operations reported EBIT-adjusted of $0.3 billion, compared to $0.3 billion in the second quarter of 2014. Results included China equity income of $0.5 billion, which generated a 10.2 percent net income margin.  
• GM South America reported EBIT-adjusted of $(0.1) billion, compared with EBIT-adjusted of $(0.1) billion in the second quarter of 2014.  
• GM Financial earnings before tax was $0.2 billion for the quarter, compared to $0.3 billion in the second quarter of 2014. 

Cash Flow, Capital Return, Liquidity

Second quarter automotive cash flow from operating activities of $5.1 billion and adjusted automotive free cash flow of $3.3 billion, were up from $3.6 billion and $1.9 billion a year ago, respectively.

Year-to-date through July 21, GM has returned more than $3.1 billion of cash to shareholders through share repurchases of $2.1 billion and dividends of $1.1 billion.

GM ended the quarter with strong total automotive liquidity of $34.9 billion.  Automotive cash and marketable securities was $22.8 billion compared with $25.2 billion at year-end 2014.

GM Q4 net income rises 2% to $913 million, and halves European losses.

General Motors said its fourth-quarter earnings rose 2 percent to $913 million, helped by strong pricing in North America, capping its fourth straight profitable year since exiting bankruptcy. GM also more than halved its loss in Europe during the final three months of 2013.

The net result of several one-time items, including costs related to GM's wind-down of most of its Chevrolet sales in Europe and manufacturing in Australia, shaved about $200 million from the bottom line. Earnings before interest and taxes and excluding nonrecurring items -- the figure that GM considers the best measure of its underlying performance -- rose 52 percent, to $1.9 billion.

It was GM's 16th straight profitable quarter following its mid-2009 bankruptcy.

Fourth-quarter revenue rose 3 percent, to $40.5 billion.

For the full year, GM's net income fell 22 percent to $3.77 billion. Higher tax expenses and other onetime items hurt the full-year bottom line by $1.3 billion. Pretax profit excluding onetime items was $8.58 billion, up 9 percent from 2012.

"Launches of some of the best vehicles in our history combined with significant improvements in our core business led to a solid year," GM CEO Mary Barra said in a statement. "The tough decisions made during the year will further strengthen our operations."

It was GM's first quarterly earnings report since Barra took over as CEO last month from Dan Akerson, who retired.

GM said it will pay up to $7,500 in profit-sharing bonuses to about 48,500 U.S. hourly employees, up from $6,750 last year.

The earnings report missed analysts' expectations on a per-share basis. GM's profit of 67 cents a share, excluding onetime items, fell short of the 87-cent average of 14 analysts' estimates compiled by Bloomberg.

GM CFO Chuck Stevens told reporters at GM headquarters today that most of that gap was attributable to a higher tax rate than analysts had expected as well as restructuring costs in Europe that analysts hadn't accounted for.

Regional performances

GM continued to shave its losses in Europe. Its fourth-quarter loss of $345 million was down from $761 million during the year-earlier period. For the year, GM lost $844 million in Europe, down from $1.94 billion in 2012.

GM posted a record $7.46 billion in pretax profit in North America for the full year, excluding one-time charges and gains.

Fourth quarter pretax profit in North America jumped 65 percent, to $1.88 billion, as stronger pricing – especially for GM's redesigned full-sized pickups.

GM's International Operations, which includes China, Australia, Korea and several other Asian markets, posted $208 million in pretax profit. But China alone had pretax profit of $400 million, while the remaining countries combined for a loss of about $200 million.

For the year, pretax profit from International Operations was $1.23 billion, down from $2.53 billion in 2012.

Stevens said several challenges are weighing on earnings in those markets, including weaker pricing due to the strong yen; unfavorable foreign exchange rates and pricing pressure in the Middle East.

Pretax profit in South America fell to $27 million, from $135 million, hurt by sagging volumes in Venezuela and restructuring costs. The economic turmoil in Venezuela, Peru and other South American markets, caused by soaring inflation, poses a risk to GM's business there, Stevens said.

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