General Motors (GM) reported today that its net profit fell more than 11% in the first half of the year to 4,268 million dollars, due to the company’s withdrawal from Europe and the drop in sales in its main market , U.S.
In addition, company executives warned that the results in the third quarter of the year will be even worse.
Despite this, GM said the company is having “solid” results, and reaffirmed its forecasts to provide benefits of $ 6 to $ 6.5 this year.
According to figures released today by the company, in the first half of the year its net profit was 4,268 million dollars, 11.4% less than in the same period of 2016.
The main reason for this decline was the 42% reduction in second quarter earnings, which ended June 30, from $ 2,866 million in the second quarter of 2016 to $ 1.6 billion in the same period this year.
The manufacturer explained that much of the decrease is the result of a $ 770 million loss charge for the suspension of its operations in Europe.
GM announced in March the sale of its European brand, Opel, to the French manufacturer PSA, an agreement that will be completed by the end of the year.
In the semester, all GM operations added 5.107 million profits, an 8.5% increase over the same period of 2016.
North America remains the most profitable region for the company, with results of $ 6,946 million in the first half, 13.3% more than in 2016.
Meanwhile, in South America, GM reduced its losses from $ 182 million to $ 142 million.
And the International Operations unit, which includes the rest of the world except Europe, earned $ 637 million, a 2 percent increase.
In addition, the financial arm of the company, GM Financial, earned 585 million dollars, a 43.7% increase.
Adjusted Ebit (earnings before taxes and interest) stood at $ 7,236 million, up 9.8%.
During the semester, GM also incurred $ 654 million in special charges: $ 460 million for the restructuring of its international operations, $ 80 million for Venezuela and $ 114 million for the defect of ignition systems.
Overall, General Motors posted $ 74.2 billion in the first half, up 5.4 percent from a year ago.
This figure allowed GM president Mary Barra to rate the results of the semester as “very solid” and the second quarter as “strong.”
“We will continue to transform GM to capitalize on growth opportunities and produce even more value for our shareholders,” added Barra.
But during a conference call with analysts and media, GM Chief Financial Officer Chuck Stevens warned that the third quarter of the year will be the worst period of 2017 in anticipation of reduced production of trucks and SUVs.
GM plans to assemble fewer vehicles of these categories in the United States to adjust the inventory of units and reduce it by the end of the year.
At the same conference, Barra explained that the sale of Opel to PSA will allow GM “to put capital and resources into better return opportunities, such as the modernization of the most profitable SUVs and vans and the emerging market vehicle program.”
Barra also pledged to “return” shareholders of the company $ 7 billion in dividends by 2020.