General Motors (NYSE:GM) on Wednesday reported fourth-quarter earnings that easily beat Wall Street expectations, but the company warned a global semiconductor chip shortage could cut its earnings by up to $2 billion this year.
Automakers and parts suppliers began warning of a semiconductor shortage late last year after demand for vehicles rebounded stronger than expected following a two-month shutdown of production plants due to the coronavirus pandemic.
GM has already temporarily closed car and crossover plants in Kansas, Canada, Mexico through mid-March due to the shortage. It also has cut production in South Korea.
GM’s crosstown rival, Ford Motor (NYSE:F), last week said the shortage could lower its earnings by $1 billion to $2.5 billion this year. GM said the shortage would cost it between $1.5 billion and $2 billion.
Adjusted Earnings per Shares came in for the quarter at $1.93, vs. $1.64 expected. Revenue was $37.5 billion, vs. $36.12 billion expected.
The company said it expects to earn between $10 billion and $11 billion, or $4.50 and $5.25 per share, in adjusted pretax profits this year. It projects adjusted free cash flow of between $1 billion to $2 billion for its automotive division in 2021. The forecasts factor in the potential impact of the semiconductor shortage, including a hit of between $1.5 billion and $2.5 billion to its free cash flow.
GM shares swooned $2.88, or 5.1%, to $53.18.
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