Amid Semiconductor Shortage, GM Surprises with Strong Earnings... "Worst in Q2 Expected"

Source: CNBC

[Asia Economy Reporter Yujin Cho] Following Ford Motor Company amid the semiconductor shortage, General Motors (GM) posted surprising earnings in the first quarter of this year. However, the outlook is not optimistic as production volume is expected to be halved in the second quarter, which is directly impacted by the semiconductor shortage crisis.

According to the U.S. economic media CNBC, U.S. automaker GM announced on the 5th (local time) that its net profit for the first quarter of this year was $3.02 billion, about 10 times higher compared to the same period last year (approximately $300 million). Adjusted earnings per share were $2.25, significantly exceeding the market expectation of $1.04.

Revenue was $32.5 billion, similar to the same period last year ($32.7 billion).

Earlier, on the 28th of last month, Ford also revealed that its adjusted earnings per share for the first quarter were 89 cents, more than four times the market expectation of 21 cents. Revenue was $36.2 billion, surpassing the market expectation of $32.2 billion.

The focus on producing high-margin vehicles such as large pickup trucks and sport utility vehicles (SUVs) amid the semiconductor shortage is evaluated to have driven the profit improvement.

As the COVID-19 situation stabilizes, the improvement in U.S. car sales also contributed to the strong earnings.

However, the earnings outlook for the second quarter is not bright. GM and Ford expect production disruptions caused by the semiconductor shortage to be most strongly reflected in the second quarter.

Mary Barra, GM’s Chief Executive Officer (CEO), said, "The worst of the semiconductor shortage has not yet come," and predicted, "It will be possible to overcome it in the second half of this year."

GM’s vehicle production this year has been about 340,000 units less than initially planned. CEO Barra predicted, "Production volume will be reduced by half in the second quarter," but did not disclose specific figures.

Jim Farley, Ford’s CEO, also warned that the impact of the semiconductor shortage will be more severe in the second quarter. CEO Farley said that production in the first quarter was 17% less than the initial target due to the semiconductor shortage, and it is expected to be reduced by about half in the second quarter of this year.

This content was produced with the assistance of AI translation services.