GM beats estimates for Q4 profit

[NEW YORK] General Motors beat analysts' estimates for fourth-quarter profit and signaled continued earnings strength this year despite short-term damage from a semiconductor shortage that is cascading through the auto industry.

GM reported an adjusted profit of US$1.93 per share for the fourth quarter Wednesday compared with analysts' consensus estimate of US$1.56, thanks to strong demand for its pickup trucks and large sport-utility vehicles.

The robust results cap off a tumultuous year for GM, which weathered shutdowns from the Covid-19 pandemic and outlined a bold move to exit gasoline-powered cars. But the guidance for 2021 shows that GM expects to grow profit despite hurdles such as the semiconductor shortfall remaining this year.

Mary Barra, GM's chief executive officer, addressed the chip issues in a call with reporters, vowing the company will shield its highest profit margin vehicles.

"We're doing everything possible right now so we won't lose any production throughout the year for full-size trucks and SUVs," she said.

The semiconductor shortage will shave US$1.5 billion to US$2 billion off adjusted earnings this year, the company estimated. It already has idled three plants until mid-March and been forced to build vehicles without certain modules at other factories, holding them until more chips come in. But it said that would be a temporary setback.

For 2021, GM forecast adjusted earnings before interest and taxes of US$10 billion to US$11 billion, which translates to adjusted earnings per share of US$4.50 to US$5.25. That compares with US$4.90 a share in 2020 and US$8.4 billion in adjusted earnings before interest and taxes.

BLOOMBERG