CNBC's Phil LeBeau reports on the company's quarterly results. Its CEO says the automaker will ‘greatly reduce’ tariff exposure.

Detroit

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

General Motors has reported second quarter earnings that surpassed analyst estimates, with earnings per share and revenue both coming in higher than expected. However, the company's profit margins have been significantly impacted by tariffs, with EBIT adjusted margin dropping from 9.3% to 6.4% compared to the previous year. North American profits and margins also saw notable declines, attributed largely to the effects of tariffs on vehicles built outside the United States. Despite these pressures, GM has not changed its full-year financial guidance, maintaining its outlook for earnings and cash flow. The company is working to offset some of the tariff impact through internal efficiencies and production adjustments, but the margin pressure remains a key concern for investors.

GM beats earnings estimates

General Motors out with second quarter results and Phil LeBeau joins us with those numbers right now. Good morning, Phil Good morning, Becky. Let's take a look at shares of General Motors under a little bit of pressure after posting a q2 Earnings that beat the street also revenue better than expected, but that's really not the main thing that the investor community is focused on It's really what's the impact of tariffs on margins? We'll talk about that in a bit earning 253 a share versus the street at 244 Revenue better than expected at forty seven point one two billion. The street was expecting forty six point two eight billion Here's the story. You'd look at EBIT adjusted the profit in the quarter 3.04 billion versus four point four four billion last year down 31% the EBIT adjusted margin 6.4% a year ago. It was nine point three percent This is where you see the impact of the margin of the tariffs that went into effect on April 2nd Automotive free cash flow two point eight two billion a year ago. It was five point three billion North American EBIT profit two point four two billion a year ago It was four point four three billion that North American margin boy It took a hit six point one percent in the second quarter a year ago It was ten point nine percent if there is good news If you're an investor in General Motors and you're looking for something to say, well, is there any bright spot out there? They have not changed their guidance It remains the same as it was on May 1st EBIT adjusted for the full year of between 10 and 12 billion dollars EPS in the range of 825 to 10 dollars for the full year and automotive free cash flow in the range of 7.5 to 10 billion dollars lots to discuss with GM CFO Paul Jacobson first on CNBC That's coming up next hour guys. And again the focus here. It's not whether or not they beat the street It's whether or not the impact on margins, which you clearly see here down 45% In terms of EBIT and then the margins have they've just been cut down dramatically because of the tariffs Is that the new normal is six point four percent margin the new normal versus nine point three percent? That's gonna be one of the first questions we have for Paul when we talk to him next hour You know filled GM has been pretty clear about the idea that with this five billion dollar head when they're expecting from the tariffs They could deal with about a third of it by Taking care of stuff in-house getting sharper. What happens to the rest of it? Can they put pressure on suppliers? Can they expect to pick up some of the rest of that in other places? How do they handle it? They're clearly eating it right now Becky. I mean you look at this. I mean, that's the impact of margins your North American margin Let's be clear here when it comes to General Motors when it comes to Ford North America is the profit driver that's where it all happens and because you have a 25% tariff on vehicles built in Canada and in Mexico or in GM's case or in Korea and look a lot of that can be offset or not a lot a certain amount can be offset because of US MCA and Ways that you the the tariffs are written right now, but not all of it And that's where you see the impact on margin Becky. They have to eat it 6.1% margin in North America versus 10.9% last year. I mean, that's the story right there Now the counter to that you may have some people sit there and say hey look in North America You made 2.4 billion dollars You didn't die because of the tariffs and you're still selling vehicles at an average transaction price that is not dropped It's over $51,000 you are not raising your incentives to the same degree that some of your competitors are in North America But if you're an investor, it's about margins you guys know this This is what we talk about all the time and that's gonna be the first question. We're gonna have for Paul Look, they are offsetting some of this by adjusting production Making changes in headcount where appropriate but at the same time they're still building vehicles Outside the United States and they have to bring those into the United States. That's not changing. That is not changing I mean and that's that's at the heart of the debate if you're an investor Okay, is this the new normal if I'm investing in General Motors?

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Jerusalem

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Taipei

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GM beats earnings estimates

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