General Motors (NYSE:GM) is looking nicer than Ford Motor (NYSE:F) after posting strong second-quarter results. EPS and revenue beat consensus estimates.
GM reported a non-GAAP EPS of $1.64 as revenue fell 1.9% Y/Y to $36.06 billion. Clearly, GM’s management is performing better than Ford’s team. GM even increased its guidance while Ford struggles with never-ending restructuring costs.
In Q2, EBIT improved on the higher mix, prices, and steady cost levels. Despite volumes falling from last year, truck performance and transformation actions lifted overall results.
FCF of $2.5 billion is slightly below the $2.6 billion Y/Y. Still, GM expects it will meet its 2019 adjusted FCF guidance. GM forecast FCF of $4.5B - $6B.
For the second half of the year, it expects meaningfully better EBIT and FCF due to a number of launches in the period. The truck launch, combined with remaining cost savings flowing through into 2020, suggests higher profitability ahead.
Plus, now that it is past the downtime in North America, the 2H strength is a positive tailwind for GM stock.
In China, GM unwound 70,000 units in inventory or about 10%. Pricing pressure in Q2 may continue into the near-term but is not yet a concern for GM management. So although the macro risks are always there, the strong product mix and product launches will offset the challenges in China.
Disclosure: Author owns shares of Ford.
