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General Motors (GM) lowered its annual forecast on Wednesday, citing rising raw material costs as a result of new steel and aluminum taxes imposed by the Trump administration.
The first US automaker is also affected by the "unprecedented" devaluation of the Brazilian real and the Argentine peso, which is weighing its sales in South America.
It now only counts on adjusted earnings per share, a benchmark in North America , $ 6 for the year, against a range of $ 6.30 to $ 6.60 previously.
Less pessimistic, the financial markets expected adjusted earnings per share of $ 6.41, which explains the disappointment of investors in Wall Street, where the title fell by more than 5% in the electronic exchange of pre-session.
These costs will also reduce by a billion dollars the flows of trés orerie, a highly scrutinized barometer because it determines the distribution of dividends
"The recent sharp increases in raw material costs and the impact of unfavorable exchange rates on the Argentine peso and the Brazilian real have a negative impact on our projections, "says the giant of Detroit.
He particularly suffers from the ongoing trade dispute between the United States and its trading partners, China, European Union, Canada and Mexico in the lead.
President Donald Trump has imposed new taxes on steel and aluminum imports of 25% and 10% respectively. China, the first country affected since March, the European Union, Canada and Mexico, affected in turn in June, responded, taking identical measures.
300 million additional costs
Steel and aluminum make up more than half of the components of a vehicle. During the quarter, their price hike increased GM's costs by $ 300 million compared to a year ago, the group said.
For the year, the bill should be more than a billion dollars if we also add the adverse effects of Brazilian and Argentine currencies, calculates GM. Previous estimates were $ 500 million.
Most of the unexpected extra costs come from North America, Chuck Stevens, the chief financial officer, told a conference call with reporters. More than half of the steel used by GM is supplied by US producers, who have increased their prices drastically since March.
"We have a lot of work to do" in North America, warned Mr. Stevens, adding that the mbadive tax cuts for businesses and individuals coupled with a low unemployment rate against a background of dynamic economic growth should limit the damage caused by the trade war for the automotive sector this year.
"We do not expect that they (tariffs, Ed) have significant consequences on the US automotive industry in 2018, (but) beyond 2018, there are many uncertainties, "said the leader
Donald Trump threatens to impose additional customs duties of 25% on car imports, which would also affect US automakers who sell cars in the United States. its in Mexico, Canada and China. GM makes many models in Mexico, including the Chevrolet Silverado and the GMC Sierra in particular.
The consequences of the trade war relegated a "solid" performance of the automotive group in the second quarter in the background.
The profit net soared 44% year on year to $ 2.39 billion. The second quarter of 2017 included a further loss of Opel, its European brand since sold to the French group PSA Peugeot Citröen.
Turnover fell slightly, by 0.6%, to 36.76 billion dollars, almost in line with expectations, sales in China have limited damage in Latin America.
"We will produce more in South America to counter the adverse effects of the unprecedented devaluation of the Argentine peso and especially the Brazilian real" , said Chuck Stevens.
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