GM Posts Narrower-Than-Expected Second-Quarter Loss

General Motors posts a narrower-than-expected second-quarter loss, even as the pandemic shutters its factories and pummels sales, leading to billions in cash burn.
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General Motors  (GM) - Get Report on Wednesday posted a narrower-than-expected second-quarter adjusted loss, even as the coronavirus pandemic shuttered its factories, pummeled sales, and led to billions in figuratively burned cash.

GM posted a second-quarter adjusted loss of $758 million, or 50 cents a share, vs. adjusted earnings of $2.4 billion, or $1.64 a share, in the same period a year ago. Analysts polled by FactSet had been expecting an adjusted loss of $1.77 a share.

Sales fell 53% to $16.8 billion, though still came in higher than analysts' estimates of $16.2 billion.

All automakers suffered a double-hit of production shutdowns due to the pandemic and drop-off in demand for new vehicles as consumers put off large-scale purchases. GM said earlier this month that second-quarter U.S. vehicle sales fell 34% from a year ago.

However, since May, GM and others U.S. carmakers including Ford  (F) - Get Report and Tesla  (TSLA) - Get Report have been slowly ramping back up production, which combined with record-low interest rates is expected to lead to a recovery in demand.

Tesla, currently the world's biggest auto maker by market capitalization, last week reported stronger-than-expected earnings and sales, and also provided positive news about delivery projections and GAAP profits.

Key to riding out that period is the amount of cash GM and others have on their books to keep operations running. GM said its cash-burn rate.

Second-quarter adjusted auto free cash flow was negative $9 billion, down $11.6 billion year over year, due to the financial impact of the pandemic and managed working capital unwind, partially offset by lower capital expenditures.

The quarter benefitted from a $500 million dividend from GM’s China operations and a $400 million dividend from GM Financial. Total automotive liquidity at the end of the quarter remained strong at $30.6 billion, the company said.

To be sure, GM and other automakers are keeping their eyes on the longer-term prize - namely the industry wide shift to non-combustion vehicles and the advent of technology that will make car accidents a thing of the past.

"We will continue to drive the necessary change throughout the company to enable growth as we prepare to deliver a world with zero crashes, zero emissions and zero congestion," GM CEO Mary Barra said in the company's earnings statement.

Ford, meantime, will report its earnings on Thursday. Analysts polled by FactSet are expecting an adjusted loss of $1.17 a share for the quarter versus an adjusted profit of 28 cents a share a year ago. 

Shares of GM were down a fraction of a cent at $26.32 in trading on Wednesday.