General Motors takes tariff hit, reaffirms FY25 guidance

Weighed down by import tariffs, General Motors’ (NYSE:GM) adjusted EBIT was down more than 30% in the second quarter from a year ago, contributing to a 3% loss in the company’s share price in Tuesday’s premarket trading.

The automaker earned a profit of $2.53 per share, which was down 17% from a year ago but 5 cents better than Wall Street’s expectations. Adjusted EBIT was down 32% to $3.04B, driving the company’s adjusted EBIT margin down 290 basis points to 6.4%. Isolating North American results, adjusted EBIT margin fell 480 basis points to 6.1%.

Revenue declined by 1.8% from a year ago to $47.12B, $1.12B better than anticipated.

In a letter to shareholders, CEO Mary Barra acknowledged the challenges the company faces due to its reliance on offshore manufacturing.

“We are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape,” Barra said in a letter to shareholders.

Mitigation efforts include $4B in new investment in U.S. assembly plants to add 300,000 units of capacity for high-margin, light-duty pickups, full size SUVs, and crossovers.

“This will help us satisfy unmet customer demand, greatly reduce our tariff exposure, and capture upside opportunities as we launch new models,” she added.

This additional capacity is expected to begin coming online in 28 months, after which the company projects it will build more than 2 million vehicles each year in the U.S.

Despite the challenging environment over the next 12 months, GM (NYSE:GM) reaffirmed its solid full year guidance, helping to offset some of the pressure on shares in early trading.

For the fiscal year, as GM (NYSE:GM) continues to deploy mitigation efforts to offset the impact of import tariffs, net income is expected to be within a range of $7.7B to $9.5B, or $8.25 to $10 per share versus $9.25 per share estimates. Adjusted EBIT is targeted for $10B to $12.5B versus estimates of $11.25B.