- General Motors delivered a robust performance in 2020 despite the coronavirus pandemic challenges.
- The company is expecting global semiconductor chip shortage to impact its 2021 earnings.
- General Motors is anticipating further growth opportunities and is focused on the global EV market.
General Motors (NYSE: GM) delivered a remarkable performance for the full-year 2020 with several records in the last quarter. The company registered robust results against all production interruptions due to the coronavirus pandemic and the impact of Takata airbag-inflator recall.
However, the US multinational business is expecting a USD 2 billion reduction in its earnings for the current year, owing to semiconductor chip shortage, globally.
Currently, the world is experiencing a shortage of semiconductor chips due to multiple reasons. During the pandemic-induced lockdown, people all around the globe became more dependent on electronic devices like laptops, TVs, and game consoles, which led to a spike in the demand for these items.
As car production activities were on halt due to restrictions and the demand for these chips was lower in the auto industry, chip makers turned to other electronics markets in order to cater to the requirements.
With the auto industry rebounding much before expectations, automakers and part suppliers began to experience chip shortage. Modern vehicles are dependent on these sophisticated and high-tech chips for advanced features. Owing to the chip shortage, the production at several plants has been temporarily halted.
General Motors has also temporarily closed its plants in Mexico, Canada, and Kansas (the US), through mid-March.
On 10 February 2021, GM reported its Q4 earnings, which surpassed the Wall Street expectations. Commenting on the robust performance, General Motors Chairman and CEO Mary Barra highlighted that the company was likely to share more growth stories in upcoming quarters.
Q4 and 2020 Financial Highlights:
- For Q4, net income stood at USD 2.8 billion compared to a loss of USD 194 million. In 2020, income was USD 6.4 billion and EBIT-adjusted USD 9.7 billion.
- In Q4, the EBIT-adjusted margin was 9.9% while full-year EBIT-adjusted margin was 7.9%.
- In Q4, EPS-diluted was USD 1.93 and EPS-diluted-adjusted was USD 1.93. In 2020, the EPS-diluted was USD 4.33 and adjusted to USD 4.90.
- The automotive operating cash flow was reported at USD 5.2 billion and USD 7.5 billion, and adjusted automotive free cash flow was USD 3.4 billion and USD 2.6 billion in Q4 and 2020, respectively.
- Q4 EBIT-adjusted for GM North America was USD 2.6 billion and EBIT-adjusted margin was 8.7%. 2020 EBIT-adjusted totalled to USD 9.1 billion, with a margin of 9.4%.
- GM International EBIT-adjusted was USD 0.3 billion while China Equity Income was USD 0.2 billion for Q4. The full-year EBIT-adjusted for GM International was (USD 0.5 billion) and China Equity Income was USD 0.5 billion.
- GM Financial EBIT-adjusted of USD 1.0 billion in Q4 and EBT-adjusted of USD 2.7 billion for 2020.
General Motors is investing in all-electric and autonomous vehicles. It plans to shift to an all-electric future as part of its plan to become carbon neutral by 2040.