USA - General Motors announces results for the second quarter, and all is looking really good.

• Strong EPS diluted of $1.81; record EPS diluted-adjusted of $1.86
• Record net revenue of $42.4 billion, up 11 percent
• Record EBIT-adjusted of $3.9 billion, up 37 percent
• GM North America sets records for EBIT-adjusted of $3.6 billion, 12.1 percent margin

General Motors Co. (NYSE: GM) today announced strong second-quarter net income to common stockholders of $2.9 billion, up 157 percent compared to $1.1 billion in the second quarter of 2015. Earnings per share (EPS) diluted was a strong $1.81, compared to $0.67 in the second quarter a year ago.

EPS diluted-adjusted was a record at $1.86, up 44 percent compared to $1.29 in the second quarter of 2015.

The company reported records for earnings before interest and tax (EBIT) adjusted of $3.9 billion and EBIT-adjusted margin of 9.3 percent. These compare to EBIT-adjusted of $2.9 billion and EBIT-adjusted margin of 7.5 percent in the second quarter of 2015, which included the impact of $0.3 billion restructuring costs.

“This was an outstanding quarter for GM,” said Chairman and CEO Mary Barra. “Our results were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide. We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”

Net revenue of $42.4 billion was a record, compared to $38.2 billion in the second quarter of 2015. Holding exchange rates constant, net revenue was $5.0 billion higher than the second quarter of 2015.

GM Results Overview (dollars in billions except for per share amounts and where noted)

	Q2 2016	Q2 2015
Global deliveries (millions of units)	2.4	2.4
Net revenue	$42.4	$38.2
Net income attributable to common stockholders	$2.9	$1.1
EPS diluted	$1.81	$0.67
Impact of special items on EPS diluted	$(0.05)	$(0.62)
EPS diluted–adjusted	$1.86	$1.29
EBIT-adjusted	$3.9	$2.9
% EBIT-adjusted margin	9.3	7.5
Automotive net cash flow from operating activities	$5.0	$5.1
Adjusted automotive free cash flow	$3.2	$3.3
% return on invested capital (ROIC)	30.5	23.4

Segment EBIT-Adjusted Results

• GM North America reported record EBIT-adjusted of $3.6 billion compared with $2.8 billion in the second quarter of 2015. For the quarter, EBIT-adjusted margin was a record 12.1 percent, compared to 10.5 percent a year ago.
• GM Europe reported EBIT-adjusted of $0.1 billion compared with breakeven EBIT-adjusted results in the second quarter of 2015. This result is the first profitable quarter since the second quarter of 2011.  
• GM International Operations reported EBIT-adjusted of $0.2 billion compared with $0.3 billion in the second quarter of 2015. Results included China equity income of $0.5 billion in both periods.
• GM South America reported EBIT-adjusted of $(0.1) billion, about equal with the second quarter of 2015.  
• GM Financial reported earnings before tax of $0.3 billion, compared with
  $0.2 billion in the second quarter of 2015.   

Cash Flow and Liquidity

For the quarter, automotive cash flow from operating activities was $5.0 billion. Adjusted automotive free cash flow was $3.2 billion. GM ended the quarter with total automotive liquidity of $34.1 billion, and automotive cash and marketable securities of $20.1 billion.

“When you deliver cars, trucks and crossovers customers really value, and generate efficiencies across the enterprise, great results follow,” said Chuck Stevens, GM executive vice president and chief financial officer. “With our aggressive vehicle launch cadence and robust global industry sales, we are confident that we can continue to achieve strong financial performance.”   

GM expects a higher proportion of volume from new or refreshed vehicles each year through 2020 compared to the prior five years, increasing to 40 percent of its total global volume, up from 26 percent in 2015.

2016 Outlook

Based on the company’s strong financial performance through the first half of 2016 and its current outlook for the second half of the year, GM now expects 2016 full year EPS diluted-adjusted to be $5.50 – $6.00, up from the previously announced $5.25 – $5.75 range.

Global Vehicle Sales

GM sold 2.4 million vehicles globally in the second quarter of 2016 to customers, about equal to the second quarter of 2015. Through June 30, the company sold 4.76 million vehicles globally.

In the U.S., GM sold 1.44 million vehicles in the first six months of the year, which included a retail sales increase of more than 1 percent. U.S. retail market share rose 0.4 percentage points through June, the largest retail share gain of any full-line automaker. In China, GM and its joint ventures delivered a record 1.81 million vehicles during the first half of the year, an increase of 5.3 percent. In Europe, Opel / Vauxhall outperformed the industry with a 7-percent sales increase to 621,000 vehicles in the first half of the year.

PSA Group’s revenue amounted to €13.0 billion, of which €8.8 billion for the Automotive division.

• The Group’s revenue amounted to €13.0 billion, of which €8.8 billion for the Automotive division, an increase of 1.5% at constant exchange rates.
• The operating environment is mixed: strong European market growth but unfavourable exchange rates.
• Global sales volumes (excluding China) were up 3.9%. They were driven by Europe, where they grew by 5.9%. 

The PSA Group’s first quarter 2016 revenue amounted to €12,998 million, of which €8,796 million for the Automotive division and €4,656 million for Faurecia. At constant exchange rates, the Group’s revenue grew by 1.5% compared with Q1 2015. For the Automotive division, new vehicle revenue fell by 1.1%. The 3.9% increase in sales volumes excluding China only partially offset the negative impact of exchange rates (-4.4%). 

In Europe, the increase in sales volumes (+5.9%) was driven by growth in all three brands, Peugeot, Citroën and DS. In China, deliveries to end customers were stable (-0.9%), while invoices were down 17.9%. In Africa and Middle East, the Group’s sales fell by 22.2%, mainly in the Algerian market.

At the end of March 2016, inventories were stable at 372,000 vehicles¹.

The Group continues to pursue its strategy of profitable growth, aimed at improving the pricing power of its three brands, Peugeot, Citroën and DS, across all regions.

Jean-Baptiste de Chatillon, Chief Financial Officer of the PSA Group and member of the Management Board, said: “Mobilised around the ambitious objectives of our Push to Pass profitable growth plan, our three brands benefited fully from the success of the Back in the Race plan and the strong growth of the European market. Despite the volatile environment, we are confident in our performance and the achievement of our goals.”

Market outlook – The Group expects the automotive market to grow by approximately 4% in Europe and 5% in China, and to contract by approximately 10% in Latin America and 15% in Russia in 2016. 

Operating outlook – The Push to Pass plan sets the following operational targets:

• Reach an average 4% automotive recurring operating margin in 2016-2018, and target  6% in 2021;
• Deliver 10% Group revenue growth by 2018² vs 2015, and target additional 15% by 2021².

¹ Excluding China, including independent dealers.
² At constant exchange rates (2015)

Before the Scandal costs, VW Group made €12.8 Billion profit, after Scandal costs, €5 Billion Loss. Oh Dear.

• Consolidated sales revenue up 5.4 percent year-on-year to EUR 213.3 billion
• Operating profit before special items slightly higher than prior-year figure at EUR 12.8 billion
• Negative earnings before and after tax owing to substantial special items of EUR 16.9 billion
• Net liquidity in Automotive Division increases to EUR 24.5 (17.6) billion
• Dividend of €0.11 per ordinary share and €0.17 per preferred share proposed

The Volkswagen Group’s operations developed very robustly in fiscal year 2015 in spite of the emissions issue. Consolidated sales revenue rose by 5.4 percent to EUR 213.3 billion on the back of improvements in the mix in the automotive business and the strong performance of the Financial Services Division, alongside positive exchange rate effects. 

The solid development of sales revenue is not reflected in the relevant earnings figures: the operating result, which had amounted to EUR 12.7 billion in 2014, stood at EUR –4.1 billion in 2015. 

This figure includes negative special items totaling EUR 16.9 billion. At EUR 12.8 billion, the operating profit before extraordinary charges was slightly higher than the prior-year figure.

The largest share of the special items amounting to €16.2 billion comprises provisions for the emissions issue, among other things for pending technical modifications and customer-related measures as well as global legal risks. This takes account of the identifiable risks in the 2015 annual financial statements in connection with the emissions issue.

The share of operating profit attributable to the Chinese joint ventures, whose business is not included in the Group’s sales revenue and operating result, marginally exceeded the excellent prior-year figure following a strong fourth quarter and on account of exchange rate effects.

Due to the high extraordinary charges, the Volkswagen Group recorded a consolidated loss before and after tax of EUR 1.3 billion and EUR 1.4 billion, respectively.

“The Volkswagen Group’s operations are in great shape, as the figures before special items for the past fiscal year clearly show,” explained the Chairman of the Board of Management, Matthias Müller. “Were it not for the sizable provisions we made for all repercussions of the emissions issue that are now quantifiable, we would be reporting on yet another successful year overall. 

The current crisis – as the figures presented today also reveal – is having a huge impact on Volkswagen’s financial position. Yet we have the firm intention and the means to handle the difficult situation we are in using our own resources,” Müller added.

The Volkswagen Group’s financial situation is favorable. The sale of the shares in Suzuki, among other things, added a total of EUR 2.8 billion to the Automotive Division’s net cash flow, lifting it to EUR 8.9 billion. Net liquidity in the Automotive Division rose to EUR 24.5 (17.6) billion.

After considering all the circumstances, the Board of Management and Supervisory Board will propose to the Annual General Meeting of Volkswagen Aktiengesellschaft on June 22, 2016 that a dividend be paid. This is proposed to be €0.11 per ordinary share and €0.17 per preferred share.

The Board of Management estimates that, on the whole, deliveries to customers of the Volkswagen Group in fiscal year 2016 will be on a level with the past year due to volume growth in China. 

Depending on the economic conditions – particularly in South America and Russia – and the exchange rate development and in light of the emissions issue, the Board of Management expects that sales revenue for the Volkswagen Group may be down by as much as 5 percent on the previous year. In terms of the Group’s operating profit, the Board of Management anticipates an operating return on sales of between 5.0 and 6.0 percent.

“This year we are again operating in an exceedingly challenging environment in which global demand for new vehicles is declining, exchange rates and interest rates remain highly volatile and competition in many of our markets is intensifying. Added to this is the emissions issue, the extensive clarification of which will also be a dominant feature of the Volkswagen Group’s work in the current year,” Chief Financial Officer Frank Witter explained. “Regardless of this, we are confident that the Volkswagen Group will make good progress on its chosen path.”

Volkswagen presents 2015 consolidated financial statements:

January – December		2015	2014	+/– (%)
Volkswagen Group (IFRSs):
Deliveries to customers	‘000 units	9,931	10,137	– 2.0
Vehicle sales	‘000 units	10,010	10,217	– 2.0
Production	‘000 units	10,017	10,213	– 1.9
Employees	Dec. 31	610,076	592,586	+ 3.0
Sales revenue	EUR million	213,292	202,458	+ 5.4
Operating profit/loss	EUR million	– 4,069	12,697
Profit/loss before tax	EUR million	– 1,301	14,794
Profit/loss after tax	EUR million	– 1,361	11,068
Profit attributable to shareholders of Volkswagen AG	EUR million	– 1,582	10,847
Earnings per share (basic)
Ordinary shares	EUR	-        3.20	21.82
Preferred shares	EUR	-        3.09	21.88
Automotive Division (including allocation of consolidation adjustments between the Automotive and Financial Services divisions):
Cash flows from operating activities	EUR million	23,796	21,593	+ 10.2
Cash flows from investing activities
attributable to operating activities*)	EUR million	14,909	15,476	– 3.7
of which investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex)	EUR million	12,738	11,495	+ 10.8
Net liquidity at December 31	EUR million	24,522	17,639	+ 39.0

		2015	2014	+/– (%)
Volkswagen AG (German Commercial Code)
Net loss/net income	EUR million	– 5,515	2,476
Dividend proposal
- per ordinary share	EUR	0.11	4.80
- per preferred share	EUR	0.17	4.86

*) Excluding acquisition and disposal of equity investments: EUR 17,270 million (previous year: EUR 15,719 million).

Prospects for 2016:

The Volkswagen Group’s brands will press ahead with their product initiative in 2016, modernizing and expanding their offering by introducing new models. Our goal is to offer all customers the mobility and innovations they need, sustainably strengthening our competitive position in the process.

We expect that, on the whole, deliveries to customers of the Volkswagen Group in 2016 will be on a level with the previous year amid persistently challenging market conditions, with a growing volume in China.

In addition to the emissions issue, the highly competitive environment as well as interest rate and exchange rate volatility and fluctuations in raw materials prices all pose challenges. We anticipate a positive effect from the efficiency programs implemented by all brands and from the modular toolkits. 

Depending on the economic conditions – particularly in South America and Russia – and the exchange rate development and in light of the emissions issue, we estimate that 2016 sales revenue for the Volkswagen Group may be down by as much as 5 percent on the prior-year figure. 

In terms of the Group’s operating profit, we anticipate an operating return on sales of between 5.0 and 6.0 percent in 2016.

In the Passenger Cars Business Area we expect a sharp decrease in sales revenue, with an operating return on sales in the region of 5.5 – 6.5 percent. 

With sales revenue in the Commercial Vehicles Business Area likely to remain essentially unchanged, the operating return on sales should be between 2.0 and 4.0 percent. 

We expect sales revenue in the Power Engineering Business Area to be perceptibly lower than the prior-year figure, with a significantly reduced operating profit. For the Financial Services Division, we are forecasting sales revenue and operating profit at the prior-year level. 

Disciplined cost and investment management and the continuous optimization of our processes are integral elements of the Volkswagen Group’s strategy.