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General Motors Stock Slumps After Earnings Miss but Sales and Outlook Impress

'There will be challenges, but we now expect full-year EBIT-adjusted in the range of $11.5 billion to $13.5 billion, compared with $10 billion to $11 billion previously,' says CEO Mary Barra.

General Motors  (GM) - Get General Motors Company (GM) Report posted weaker-than-expected second quarter earnings Wednesday, but lifted its full-year profit guidance, as warranty costs linked to the Chevy Bolt battery recall ate into the carmaker's bottom line.

Shares slumped to a four-month low, however, as the carmaker cautioned that it will ""continue to see the impact this year" of the global shortage in semiconductors that has impacted rivals such as Tesla  (TSLA) - Get Tesla Inc Report, Toyota  (TM) - Get Toyota Motor Corp. Sponsored ADR Report and Volkswagen  (VWAGY) .

General Motors said adjusted earnings for the three months ending in December came in at $1.97 per share, up from a loss of 50 cents per share over the same period last year but well shy of the Street consensus of $2.23 per share. GM added that it booked $1.3 billion in warranty recall costs for the quarter, with $800 million linked to the replacement of Chevy Bolt batteries. 

Group revenues were pegged at $34.2 billion, GM said, a 103.8% increase from last year that beat the analyst consensus of $30.9 billion. 

The company also said it sees full-year adjusted earnings range of between $5.40 and $6.40 per share, up from $4.50 and $5.25 per share.

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"Halfway through 2021, I'm pleased to report we’re accelerating our progress and advancing our vision of a world with zero crashes, zero emissions and zero congestion," CEO Mary Barra said in a letter to investors. "The credit for our strong first half goes to our employees and extended team, including suppliers and dealers, who have collectively demonstrated strength, agility and resilience.

"There will be challenges, but we now expect full-year EBIT-adjusted in the range of $11.5 billion to $13.5 billion, compared with $10 billion to $11 billion previously," she added.

General Motors shares were marked 9% lower in early afternoon trading following the earnings release to change hands at $52.66 each, the lowest since early March.

Last week, GM's smaller rival, Ford Motor  (F) - Get Ford Motor Company Report, lifted its 2021 forecast following a surprise second quarter profit that defied supply constraints linked to the global semiconductor shortage.

Ford said adjusted earnings for the full year would come in between $9 billion and $10 billion, a massive boost from its prior forecast of around $5.5 billion, and said sales could rise as much as 30% compared to first half volumes.

Ford shares were marked 1.1% lower in pre-market trading at $13.87 each.