Tariffs Could Cut into GM’s Third and Fourth Quarter Profits

Increased tariffs on steel and aluminum mean that General Motors is expecting lower profits for the year, the company said in its second-quarter results statement earlier today.

GM reported revenues of $36.8 billion in the second-quarter of 2018. That’s earnings of $2.7 billion in North America, a 9.4 percent margin. Internationally, GM reported earnings before interest and tax of $100 million.

While GM gets most of its steel and aluminum from domestic sources, the 25 percent tariff on steel and 10 percent on aluminum have reduced domestic supply and increased prices. That’s lead to an estimated impact of $1 billion in added costs, double a previous estimate. “The challenge has been greater than anticipated,” said CFO Chuck Stevens on a conference call earlier today.

Other factors that affected earnings included currency fluctuations in South America, specifically the Argentine peso and Brazilian real. The automaker expects those impacts to continue through the second half of the year.

The company now forecasts EPS diluted of $5.14 for the year. The company reported earnings per share of $1.81 for the quarter, beating analyst forecasts of $1.78.

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