General Motors beats 2Q net income expectations, misses revenue forecasts

NEW YORK (TheStreet) – General Motors (GM – Get Report) is scheduled to report its 2015 second quarter earnings results before the market open on Thursday.

The first two quarters of the year were strong as we fully capitalized on a robust North American industry and maintained our strength in China, despite the challenging conditions in that market.

Chief Financial Officer Chuck Stevens said GM expects second-half pre-tax profit to be even stronger than the $5 billion in the first six months of the year.

GM’s net income far surpassed the $190 million posted in last year’s second quarter, which was hobbled by about $1.5 billion in one-time items, mostly related to GM’s record string of safety recalls.

Concerns about weakness in China have weighed on GM’s shares, sending the stock down 13 percent this year through Wednesday. Profits rose despite declining global vehicle deliveries and a 3.5 percent decline in worldwide revenue. Holding exchange rates constant, net revenue was $0.9 billion higher than the second quarter of 2014. We expect continued strong performance in these key markets.

On a GAAP basis, GM’s EPS in the quarter was $0.67, which included $600 million related to a previously announced currency devaluation in Venezuela, $400 million for asset impairments primarily for GM Thailand and $100 million for an adjustment to the estimated cost of the ignition switch compensation program.

GM Europe reported EBIT-adjusted of $(0.0) billion.

GM’s North American operations were the main engine of growth for the company, as profits in the region doubled to $2.8 billion and profit margins of 10.5 percent, almost doubled year- ago levels.

GM’s earnings were negatively affected by charges totaling $1.1 billion. This compares with EBIT-adjusted of $(0.3) billion in the second quarter of 2014, which included $0.2 billion for restructuring costs. We are inclined to sell into any relative strength. Spending on new models won’t slow, Stevens said, but GM will “monitor and time and continue to evaluate” when to add new capacity in the Chinese market.