‘Business as Usual’ – Peace / Safety / Destruction / Economic Collapse
Jesus said the coming of the Son of Man will be just like the days of Noah (Matthew 24:37-39). The thing about the days of Noah is that even in the midst of terrible apostasy, evil, violence, and rebellion against God, the people went ahead with their normal lives. They planted fields, they harvested crops, they built houses, they got married, and they had children. They went about business as usual, until the very day that Noah entered the ark, and then destruction came and took them all away
1 Thessalonians 5:3 For when they shall say, Peace and safety; then sudden destruction cometh upon them, as travail upon a woman with child; and they shall not escape.
Revelation 13:16-17 And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
Business as Usual? Convergence of Economic Signs: GM faces declining sales and price wars in largest markets including China.
By Ben Klayman Reuters•July 31, 2019
DETROIT (Reuters) – General Motors Co’s <GM.N> investors will see on Thursday how the Detroit carmaker is weathering declining sales and mounting price pressures in its largest markets when it reports second-quarter earnings.
Slumping industry demand in China, the world’s largest auto market, and an escalating price war in the lucrative U.S. pickup truck segment are ratcheting up the pressure on GM. Other automakers, including U.S. rival Ford Motor Co <F.N> and Germany’s Daimler AG <DAIGn.DE>, offered disappointing forecasts last week.
In April, GM Chief Executive Mary Barra said her “confidence in the year ahead remains strong,” citing the company’s new full-size pickup truck launch and the automaker’s ongoing business transformation.
Investor David Kudla, chief investment strategist for Michigan-based Mainstay Capital Management, said GM must “carefully juggle” its restructuring with the rollout of its high profit vehicles even as it invests for the industry’s future while facing such headwinds as declining global sales.
For the full year, GM has forecast adjusted earnings of $6.50 to $7 a share and adjusted automotive free cash flow in the range of $4.5 billion to $6 billion.
For the second quarter, analysts expect GM to earn $2.08 billion, or $1.44 a share, on revenue of $36.1 billion, according to IBES data provided by Refinitiv.
GM must deliver as much as $10 billion in cash flow in the final three quarters of 2019 to hit its full-year target, amid stagnant U.S. demand and plummeting industry sales in China. It reported a negative cash flow of $3.9 billion in the first quarter.
In April, GM said it would hit its full-year target through strong performance, and annual dividends from China and GM Financial.
In 2018, the Detroit company reported negative cash flow of $3.3 billion in the first quarter, but ended the year at positive $4.4 billion.
Auto sales in China, GM’s largest market, are headed for a decline for the second year running after demand contracted for the 12th straight month in June.
In the second quarter, GM’s China sales slid 12%, a slight improvement over the 17.5% decline in the first quarter.
GM has laid out plans to introduce around 20 new models or variants of older ones this year, most in the second half. Profit pressure could increase as it launches a series of lower-margin electric vehicles over the next several years.
Last week, Ford posted a lower-than-expected profit and provided investors with a full-year earnings forecast that fell short of analysts’ expectations, and luxury carmaker Daimler reduced its 2019 sales outlook for Mercedes-Benz cars.
GM’s profits in the lucrative pickup truck market have also been pressured by an escalating price war with Ford and Fiat Chrysler Automobiles (FCA) <FCHA.MI>. The three Detroit automakers dominate the segment.
GM executives previously said they were “bullish” on sales in the segment for the rest of the year, and have cited the introduction of more profitable models as the launch continues.
GM Chief Economist Elaine Buckberg said this month that U.S. industry sales were strong in the first half and should remain so in the second half and get even more support if the Federal Reserve cuts interest rates as expected.
The company’s U.S. inventory of Chevrolet Silverado and GMC Sierra trucks at the end of July was 108 and 110 days, respectively, according to Automotive News. In comparison, inventory for the Ford F Series and FCA RAM trucks stood at 88 and 75 days, respectively.
GM no longer discloses monthly sales data and a company spokesman said the Automotive News estimates were incorrect. He added that truck inventories were approaching “optimal levels” and GM tries to maintain about a 100-day supply because of the complexity of truck offerings.
Last week, GM backed off the target for commercial deployment of cars by its Cruise self-driving unit beyond 2019, citing a need for more testing.