Detroit (AP) – General Motors’ first-quarter net profit jumped to $ 2.98 billion, as strong demand from U.S. consumers and rising prices offset production cuts caused by a global shortage of computer chips.
Despite the semiconductor shortage, GM stuck to the full-year pre-tax profit forecast of $ 10 billion to $ 11 billion issued earlier in the year and said profits would be at the high end of the year. fork. Annual net profit is expected to be between $ 6.8 billion and $ 7.6 billion. The company is forecasting a strong first half with pre-tax profit of around $ 5.5 billion.
CEO Mary Barra wouldn’t say how much production she expects to lose due to the chip shortage. But she said the buying, manufacturing, engineering and sales teams were working hard to divert chips from cars and small SUVs to full-size pickups, big SUVs and new electric vehicles.
“A lot of really good work is being done in our company to source semiconductors, get them our most demanded and limited (factory) capacity products,” she said.
GM reiterated that the shortage will cost it between $ 1.5 billion and $ 2 billion in pre-tax profits this year due to the loss of production. The company was forced to cut production on some smaller vehicles with lower profit margins, like the Chevrolet Equinox SUV.
“Is there an impact this year? Absolutely, ”Barra said on a conference call with reporters. “But the team continues to work to minimize it.”
The profit increase in the first quarter was 12 times greater than the same time last year, when the onset of the coronavirus pandemic forced automakers to shut down factories, limiting GM’s net profit to $ 247 million.
GM shares rose 3.5% to $ 57.25 on Wednesday in pre-market.
Excluding non-recurring items, GM made $ 2.25 a share from January through March, doubling Wall Street estimates by $ 1.05. Revenue of $ 32.47 billion was lower than an estimate of $ 33 billion according to FactSet.
The Detroit automaker reported first quarter pre-tax income of $ 4.4 billion.
During the quarter, the company said it was able to divert valuable computer chips to more profitable models such as pickup trucks and full-size SUVs, which generated higher revenue.
In the United States, GM’s most profitable market, sales increased 4% from January to March compared to a year ago. But even with that gain, first-quarter sales of 639,406 vehicles were the second lowest in the first quarter since 2015, and the numbers were 4% lower than the same period in 2019, according to Cox Automotive.
Still, demand was strong and inventory was low, which allowed GM to cut discounts and increase prices. GM’s average selling price hit a record high of $ 44,685, up 9% from a year ago, according to Cox figures.
Crosstown rival Ford Motor Co. last week said the worsening chip shortage would cut production in half in the current quarter. The situation will improve in the second half of the year, but Ford will still see production fall by 10% compared to the original plans. This means that Ford will not be able to make up for the loss in production this year.
The company expects to lose factory output of 1.1 million vehicles for the year, from an earlier estimate of 200,000 to 400,000. That will mean fewer vehicles to sell, but so far the prices are higher because demand is high.
Almost every automaker is grappling with the chip shortage, caused by semiconductor makers replacing their factories with more profitable consumer electronics processors when auto factories shut down due to the coronavirus the year last. Auto factories returned faster than expected, but chipmakers did not quickly switch factories to automotive grade chips. Then a fire in March wiped out much of chip production at a factory in Japan that makes chips for vehicles.