New York (CNN Business)Covid lockdowns in China hammered earnings at General Motors, and America’s largest automaker said it is preparing for a possible recession.
“There are concerns about economic conditions, to be sure,” said CEO Mary Barra in a statement to shareholders. She said the company is preparing for a possible downturn by reducing discretionary spending and limiting hiring.
“We have also modeled many downturn scenarios and we are prepared to take deliberate action when and if necessary,” she said.
Still, the automaker tried to assure investors it expects to hit its full-year earnings target.
For the second quarter, GM (GM) reported adjusted earnings of $1.7 billion, down from $2.9 billion a year earlier, falling about $60 million short of forecasts. But revenue was up $1.6 billion to $35.8 billion, easily topping forecasts for drop in revenue, as the limited supply of vehicles and strong demand, especially in North America, drove up prices.
The number of vehicles sold worldwide by GM’s dealers and distributors fell 19% to 1.4 million. Part of that was because of the lockdown in China, and part of it was due to the continued shortage of computer chips and other needed supplies.
The Covid shutdowns in China limited production at Chinese factories and brought sales in the country to a near halt. China has been GM’s largest market in recent years, although US sales topped Chinese sales in the most recent quarter.
Shares of GM (GM) were slightly lower in premarket trading following the report.
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