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GM Blasts Earnings Forecasts, Repeats 2021 Profit Guidance; Shares Surge

CEO Mary Barra said the group will "continue to accelerate our investment in electric vehicles, self-driving technology and other growth opportunities" as it manages short-term supply chain challenges.

General Motors  (GM)  posted much stronger-than-expected first quarter earnings Wednesday, while confirming its full-year profit guidance even as chip shortages bloated its overall inventory and clipped free cash flow.

General Motors said adjusted diluted 2.25 per share, up 262% from the same period last year and more than double the Street consensus forecast of $1.04 per share. Group revenues, General Motors said, slipped modestly from last year to $32.47 billion, coming in just shy of analysts' estimates.

Looking into the 2021 financial year, GM said it expects profits closer to higher end of its $10 billion to $11 billion range, or $4.5 to $5.25 per share, including first half total of around $5.5 billion.

"These strong results demonstrate once again the underlying strength of our business, especially in North America and China, and at GM Financial" said CEO Mary Barra. "We continue to execute our strategy and make significant progress on our transition to an all-electric future with the growth opportunities it creates."

"The speed and agility of our team are front and center as we move from managing through a pandemic to managing the global semiconductor shortage," she added. "This remains a challenging period for the company as we emerge from 2020, but the team continues to demonstrate its ability to manage complex situations."

"Even as we manage these short-term challenges, we continue to accelerate our investment in electric vehicles, self-driving technology and other growth opportunities," Barra said. "We have made significant strides so far this year."

GM shares were marked 4% higher in early trading immediately following the earnings release to change hands at $57.50 each, a move that would extend the stock's year-to-gain to around 41%.

GM said its free cash flow for the quarter was -$1.5 billion, largely due to an inventory of around 8 million vehicles that are already built, but are awaiting semiconductors in order to be completed and sold. GM said it expects to take a hit of between $1 billion and $2 billion as a result of the shortage over the balance of the year.

Last week, GM's main U.S. rival, Ford Motor Co.  (F) , said the global chip shortage would pare its full-year production by around 1.1 million vehicles and cost it around $2.5 billion. Ford added that it doesn't expect the bottlenecks to ease until at least the first half of 2022.