General Motors’ world headquarters is located at the Detroit Renaissance Center.
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DETROIT – General Motors and Ford Motor are expected to report relatively solid third-quarter earnings on Wednesday, despite ongoing global supply chain disruption, including a shortage of semiconductor chips that has depleted vehicle inventories but boosted profits this year.
Detroit’s automakers have done their best during the disruptions, allowing them to raise their revenue expectations for the year with record car prices and profits amid surprisingly robust consumer demand. This trend is expected to continue as the auto industry recovers inventories as production resumes in the coming weeks and quarters, analysts said.
“Not only should both sides benefit from favorable fundamentals in an upward cycle, but both will have a significant opportunity to improve their perception of their long-term positioning in the EV and auto world,” Credit Suisse analyst Dan Levy said in his final investor note. a week.
JPMorgan analyst Ryan Brinkman raised his estimates last week to predict significant gains for GM and raised Ford’s estimates to more modest numbers than the in-line consensus. However, he noted that Ford’s performance is expected to rise during the quarter, while GM’s performance will decline.
Here’s what Wall Street analysts expect from each automaker’s third-quarter earnings, as well as other things investors should be aware of before GM reports ahead of the market open on Wednesday, and then Ford after the markets close.
Wall Street estimates
Analysts estimated by Refinitiv that GM will report earnings per share of 96 cents and revenue of $ 26.5 billion, down 25.3% from a year earlier.
Ford is expected to earn 27 cents per share on auto industry revenues of $ 32.5 billion, down 6.2%, according to Refinitiv data.
GM and Ford executives said they expect the second half of the year to be weaker than the first six months of 2021.
GM previously warned investors that its North American wholesale volumes would in the second half of 2021 will decrease by about 200,000 units compared to the first half of the year. The company remains on track to its financial guidance for the year, including adjusted earnings of $ 11.5 billion to $ 13.5 billion, or $ 5.40 to $ 6.40 per share. In the first six months of the year, it earned about $ 6.2 billion, or $ 4.21 per share.
GM said it expects to see a loss of $ 3.5 billion to $ 4.5 billion in the second half of the year due to rising commodity prices of $ 1.5 billion to $ 2 billion and lower revenue from the finance division.
In July, Ford raised its forecast for the year, but told investors that the second half of the year will be weaker than the first in terms of its operating profit, which was $ 5.9 billion until June. At the time, the company raised its full-year adjusted pre-tax profit forecast by about $ 3.5 billion to $ 9-10 billion.
Deutsche Bank analyst Emmanuel Rosner expects both automakers to hit the upper end of their previous ranges, if not higher.
“We expect both Ford and GM to outperform consensus 3Q forecasts and maintain / increase their full year outlook. In addition, we see several potential catalysts on the horizon for both companies, ”he said in a note Monday, referring to the development of electric and autonomous vehicles. …
Electric vehicles / AV
While automakers are investing billions of dollars in electric and autonomous vehicles, this segment will not contribute much to their third-quarter earnings.
Both automakers revealed important new details over their plans for emerging sectors during the last quarter, including Ford’s $ 11 billion investment in electric vehicles and batteries.
GM set financial targets such as doubling revenues and increasing profits to 12-14% by 2030 on Investor Day earlier this month. Its subsidiary Cruise also said it plans to start charging fees for robotaxi services as early as next year in San Francisco, pending final regulatory approval.
During the quarter, GM also said it recognizes an anticipated third-quarter recovery that will offset $ 1.9 billion of the $ 2.0 billion in costs associated with the ongoing recall of its Chevrolet Bolt electric vehicles as part of a settlement with LG, which produced defective batteries.
Ford shares are up roughly 80% this year, so investors will be watching for any additional brake on the automaker next year.
They will also want to know any updates to the production and supply of the Ford F-Series pickups, which the automaker, like GM, has partly built to complete when the chips become available.
Steve Carlisle, GM’s chief executive officer for North America, said last week that the automaker is more than halfway through the delivery of newly assembled pickups that it has parked due to a shortage of semiconductor chips, according to Reuters.
Earlier this month, reporting a 32.8% decline in third-quarter sales from the same period last year, GM said the semiconductor chip situation is improving. November 1 is expected to be the first time since February that no GM assembly plant in North America has been idle due to chip shortages. However, two of them are not working on the refurbishment, and some are working on fewer shifts.
GM shares are expected to rise by about 40% in 2021.