GM reports fourth-quarter sales and profits beat, issues improved earnings forecast but admits the pace of electric vehicles has slowed
general motors (GM) reported top and bottom beats for the fourth quarter, and issued full-year earnings guidance for 2024 that matches its initial 2023 forecast on Tuesday.
The upbeat earnings report comes as GM looks to shake off the effects of the UAW strike and recalibrate its electric vehicle rollout, which the company admits has “created some uncertainty.”
Shares of the automaker jumped more than 7% in premarket trading after the financial update was released.
For the quarter, GM reported total revenue of $42.98 billion, beating Bloomberg’s estimate of $39.53 billion, though that number was down compared to the $43.1 billion the company reported in the fourth quarter of 2022. On the profitability front, GM reported adjusted earnings per share of $1.24 versus an estimated $1.16, on adjusted earnings before interest and taxes (EBIT) of $1.757 billion, although that number was down 53.8% from a year ago.
For the year, GM had adjusted earnings before interest, taxes, depreciation and amortization of $12.4 billion; In late November GM It reiterated its forecast for the full yearThe company expects adjusted EBITDA to range between $11.7 billion to $12.7 billion, compared to its previous forecast of $12 billion to $14 billion.
Last year’s preliminary range of $12 billion to $14 billion was what GM now considers its adjusted EBIT forecast for 2024. The company also sees $8.50 to $9.50 in adjusted earnings per share for this year as well.
“Consensus is growing that the U.S. economy, labor market and auto sales will continue to be resilient, and at GM, we expect healthy industrial sales of approximately 16 million units as the electric vehicle mix continues to grow,” said GM CEO and Chairman Mary. Barra said in her letter to shareholders.
As for electric vehicle sales, GM has suffered some hurdles in 2023 with its previously strong rollout, and some decline is expected this year. In fact, a company spokesperson said GM will have $1.7 billion in reserves to cover losses related to existing electric vehicle inventory in the fourth quarter.
“It is true that the pace of electric vehicle growth has slowed, which has created some uncertainty,” Barra said, though she expects GM to be “variably earnings positive in the second half of the year” based on our current forecast for EV demand and production growth. .
GM CFO Paul Jacobson also reiterated the company’s goal of EV profitability in a roundtable call with reporters. “We’re not going to get to low-single-digit profitability [EBIT EV margin] “Until 2025,” he said.
GM, which has abandoned its goal of building 400,000 electric vehicles by mid-2024, has not said whether it will do so or not. It still expects to have 1 million units of EV capacity By 2025.
In addition to restoring its earnings forecast last November, GM unveiled a $10 billion “accelerated stock repurchase” (ASR) program with the goal of increasing common stock dividends by 33% starting in January. Unlike a traditional stock buyback, GM says its program will begin immediately.
“Everyone on the team is focused on strong execution to maintain our momentum and create shareholder value, and we are deeply committed and responsible to do just that,” Barra said in her letter.
Impact of strikes
Despite the UAW work stoppage, GM’s fourth-quarter sales were not significantly affected, as the company said it had built up sufficient inventory in anticipation of the strike. Earlier in January GM Reported sales in the US for the fourth quarter increased 0.3% Compared to the same period last year, approximately 625,176 cars and trucks were sold.
Overall, GM said sales jumped 14.1% to 2.6 million vehicles for 2023, making it the company’s best year since 2019. The automaker also increased its market share by 0.3% to 16.3% overall in the United States. GM said it ranked No. 1 in U.S. full-size pickup sales (841,000 units) and No. 1 in full-size SUV sales (245,000 units).
GM also expected total U.S. auto industry sales to reach 16 million in 2024, which would be a strong improvement after the pandemic; Just 13.4 million cars sold in 2022This is the lowest in a decade.
But overseas is a different matter for GM. Jacobson said GM expects a loss in China for the first quarter. “We’re going to have a tough first quarter there,” he said.
Another issue GM has faced concerns issues with its Cruise AV business unit. In November, Cruise temporarily halted all autonomous activities nationwide with its robotic vehicle after an accident in which a A woman was run over by a cruise taxi, stopped on top of her, then dragged her for about 20 feet before stopping. The woman was seriously injured as a result of the accident. A few weeks later, Kyle Vogt, CEO of GM’s Cruise autonomous vehicle division, said, He announced his resignation from his position And leave the company.
Late last week, Cruz revealed this Under investigation by the Department of Justice and the Securities and Exchange Commissionamong other regulatory bodies, regarding the incident with the pedestrian being dragged and Cruz’s actions in the immediate aftermath of the event.