Plant closings send GM to 2Q loss, but signs of improvement
DETROIT — Even though General Motors was able to reopen its U.S. factories for the last half of the second quarter, the company still lost $806 million from April through June.
The Detroit automaker closed its plants on March 18 and they remained closed for two months due to the coronavirus. Production didn’t resume fast enough to stem the losses.
Like other automakers, GM counts revenue when vehicles are shipped from factories, so it had little money coming in for about seven weeks in April and May.
The company reported a loss of 50 cents per share excluding one-time items. That was better than Wall Street expected, with analysts polled by FactSet predicting a $1.77 per-share loss.
Revenue was cut in half to $16.78 billion, but that also topped expectations.
GM burned through more than $9 billion during the quarter, including nearly $8 billion from operations and $1.1 billion in capital spending. It lost money before taxes in all of its business units save for its financial arm. In its traditionally profitable North America wing, GM lost $100 million.
The company raised borrowing on its revolving credit line to $16 billion to get through the crisis, pushing automotive debt to over $32 billion. It was $13 billion a year ago.
Chief Financial Officer Dhivya Suryadevara said that if annual U.S. sales continue at a rate of 14 million and production isn’t disrupted, GM should generate $7 billion to $9 billion in cash during the second half of the year, offsetting a large part of the first-half cash burn.