GM 2020 profit drops, but it makes $6.43B despite pandemic
The company predicts a global shortage of semiconductor chips will cost $1.5-$2B before taxes this year due to lost production.
General Motors’ profit fell 4.5% in 2020, but a strong second half more than offset the effects of pandemic-related factory closures and a costly air bag recall.
The Detroit automaker said on Feb. 10 that it made $6.43 billion as demand for its vehicles surged late in a year dominated by coronavirus upheaval. In the fourth quarter, the company made $2.85 billion.
After GM’s North American factories reopened in May, the company ran many of them flat-out but couldn’t make up all the lost production. As customers returned to buying again, inventory was short and GM’s U.S. sales for the year fell 12% from 2019. But because buyers bought more expensive trucks and SUVs and loaded them with options, the company was able to turn a big profit.
Excluding one-time items, GM made $4.90 per share in 2021, beating Wall Street estimates of $4.40. Revenue for the year was $122.49 billion, which also passed estimates of $120.83 billion, according to FactSet.
For the fourth quarter, the company earned $1.93 per share, also ahead of analyst expectations of $1.60. Revenue was $37.52 billion, surpassing estimates of $36.18 billion.
But there are new challenges ahead. The company predicted that a global shortage of semiconductor chips will cost it $1.5 billion to $2 billion before taxes this year due to lost production. Still, GM expects pretax income for the year of $10 billion to $11 billion, or $4.50 to $5.25 per share.
The shortage has forced GM to cancel shifts at several factories, but CEO Mary Barra said it won’t hit GM’s most profitable vehicles that are in high demand. She expects the chip shortage, which is hitting the entire auto industry, to resolve itself this year.
“We’re doing everything possible,” Barra said. “We won’t lose any production throughout the year as it relates to full-size trucks and SUVs.”
And on Feb. 10, the company released more details about its aggressive push into electric vehicles.
GM already has pledged to spend $27 billion developing 30 new global electric vehicles and on autonomous vehicle research by 2025, with two-thirds of them coming to the U.S. The company said on Feb. 10 that it would spend more than $7 billion on electric and self-driving vehicles in 2021 alone.
In North America, GM’s primary profit centre, the company made just over $9 billion before taxes. That means about 44,000 members of the United Auto Workers union will get profit sharing checks of around $9,000 later this month.