GM beats Wall Street's third-quarter estimates, guides toward 'high end' of 2021 earnings forecast - CNBC

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DETROIT – General Motors on Wednesday topped Wall Street's earnings and revenue estimates for the third quarter, while telling investors its full-year results would be at the "high end" of its previous guidance.

The third-quarter was expected to be a rougher one than the first half of the year for GM. Analysts, however, said they expect relatively solid results, despite a global shortage of semiconductor chips that has depleted vehicle inventories and shuttered plants.

Here's how GM performed, compared with analysts estimates as compiled by Refinitiv:

Adjusted earnings: $1.52 a share vs. 96 cents a share estimate
Revenue: $26.78 billion vs. $26.51 billion estimate

GM's previously told investors it would earn between $11.5 billion and $13.5 billion on an adjusted basis, or $5.70 to $6.70 a share and between $8.1 billion and $9.6 billion on an unadjusted basis.

"Our third-quarter 2021 results clearly illustrate the strength of the underlying business that is funding our future, especially when you put them in the context of the calendar year," GM CEO and Chair Mary Barra said Wednesday in a letter to shareholders.

Strong vehicle pricing as well as income of about $1.1 billion from its financial arm also boosted GM's results. GM Financial's earnings through the first three quarters were $3.9 billion, up 132% from a year earlier.

The automaker expects strong vehicle pricing to continue "well into" next year, Barra said Wednesday during CNBC's "Squawk Box."

Shares of GM jumped by more than 3% before retreating to a drop of about 2% before the markets opened. Shares of GM are up by 38% in 2021.

On an unadjusted basis, net income was $2.4 billion for the third quarter compared with $4 billion a year earlier, when dealerships and plants largely reopened after being shuttered during some of the second-quarter due to the coronavirus pandemic. The automaker reported pretax adjusted earnings of $2.9 billion for the third quarter, down from $5.3 billion a year earlier.

Third-quarter earnings also benefited from a deal with LG Electronics that would offset $1.9 billion of $2.0 billion in estimated costs of a recall of Chevrolet Bolt EVs due to fire risks. LG produced defective batteries for the vehicles at plants in South Korea and Michigan.

Barra during a call Wednesday said the automaker's supply of semiconductor chips is improving, but "It still continues to be somewhat volatile." She said GM expects the shortage to continue into the first half of next year.

"We are seeing some improvement in fourth quarter; we expect to see some additional improvement in Q1," she told reporters during a call Wednesday morning. "Although we think the first half of next year, we'll still see impact from the semiconductor shortage. We think it will get better toward the end of the year."

GM previously warned investors that its North American wholesale volumes would be down by about 200,000 units in the second half of 2021 compared with the first half, due to the parts problem.

GM said third-quarter chip supplies were largely due to the spread of the Covid-19 delta variant in southeast Asia, specifically Malaysia, according to Barra. Earlier this month, GM said the semiconductor chip situation was improving.

Nov. 1 is expected to mark the first time since February that none of GM's North American assembly plants will be idled due to the chip shortage. However, two remain down for retooling and some are operating on less shifts.

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