General Motors (NYSE:GM) fell short of Wall Street’s earnings expectations for the second-quarter despite a strong profit and raising its guidance for the year.
GM’s second-quarter earnings were dragged down by about $1.3 billion in warranty recall costs, including $800 million related to the Chevrolet Bolt EV. The electric vehicle has been recalled twice in the past year due to fire risks.
The automaker on Wednesday raised its adjusted full-year guidance to between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share, up from $10 billion to $11 billion, or $4.50 to $5.25 a share.
On an unadjusted basis, net income was $2.8 billion for the second quarter compared with a loss of $758 million in the second quarter of 2020 due to the coronavirus pandemic causing rolling shutdowns of its factories. The automaker reported pretax adjusted earnings of $4.1 billion for the second quarter, up from a loss of $536 million a year earlier.
GM has been weathering challenges from a global shortage of semiconductor chips, which has caused factory shutdowns and is expected to shave billions off the industry’s earnings in 2021.
GM on Tuesday confirmed its three North American full-size pickup truck assembly plants will be shut down next week due to the shortage.
In June, GM projected better-than-expected results in the second quarter despite the industry-wide impact of the shortage, which also is causing record vehicle pricing and profits.
GM shares tumbled $3.79, or 6.5%, to 54.13
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