General Motors’ second quarter earnings lagged the year ago period despite increased revenue during the period. However, the company says its on track to meet its full-year guidance as it expects a strong second half.

The company reported net income of $1.7 billion, which was down $1.1 billion from the year ago period. The slide came despite an increase in revenue to $35.8 billion from $34.2 billion. It was a tough period overall when compared to last year’s results.

The company’s EBIT-adjusted income was also down, coming in at $2.3 billion from $4.1 billion in Q2 2021. The company’s margins were nearly down by half in both measurements. The company’s two biggest markets: North America and China were down during the quarter. In fact, China posted an equity income loss of $87 million after reporting a profit of $276 million last year at this time.

Through the first half of the year, GM’s revenue was up to $71.7 billion from $66.6 billion, but again the tough production battles ate into the profits, as the company’s net income and margin as well its EBIT-adjusted income all declined.

In a letter to shareholders, GM Chair and CEO Mary Barra said the results “reflect the impacts of the supply chain disruptions we experienced, especially in June.”

On the bright side

Barra took an optimistic tone in the letter, noting the second quarter numbers also show demand for the company’s products, particularly the Chevrolet Silverado, GMC Sierra and full-size SUVs. Each, according to Barra, “continued their market leadership despite low inventories.”

She reaffirmed the company’s full-year earnings guidance of Full-year net income of between $9.6 billion and $11.2 billion, and EBIT-adjusted of between $13 billion and $15 billion. Full-year EPS-diluted will come in between $5.76 and $6.76, and EPS-diluted-adjusted of between $6.50 and $7.50.

Full-year net automotive cash provided by operating activities guidance range of between $16 billion and $19 billion, and adjusted automotive free cash flow guidance range of between $7 billion and $9 billion.

Strong finish to the year

The company is expecting a strong second half and production and wholesale deliveries will be up sharply

“We have been operating with lower volumes due to the semiconductor shortage for the past year, and we have delivered strong results despite those pressures,” she wrote in the letter. “There are concerns about economic conditions, to be sure. 

“That’s why we are already taking proactive steps to manage costs and cash flows, including reducing discretionary spending and limiting hiring to critical needs and positions that support growth. We have also modeled many downturn scenarios and we are prepared to take deliberate action when and if necessary.