General Motors (GM) on Tuesday reported fourth-quarter sales and bottom line growth and announced full-year profit guidance for 2024, which is in line with initial expectations for 2023.
The upbeat earnings report comes as GM looks to shake off the fallout from the UAW strike and recalibrate its electric vehicle rollout, which the company admits has “created uncertainty.”
The company's stock price soared more than 9% in early trading following the release of its fourth-quarter results, hitting its highest since July 2023.
For the quarter, GM reported revenue of $42.98 billion, beating the Bloomberg consensus estimate of $39.53 billion, but that number was higher than the $43.1 billion the company reported for Q4 2022. decreased in comparison. In terms of profitability, GM reported adjusted earnings per share of $1.24. Adjusted EBIT (earnings before interest and taxes) was estimated at $1.757 billion, or $1.16, a decrease of 53.8% from the same period last year.
For the year, GM earned $12.4 billion in adjusted EBIT. In late November, GM revised its full-year outlook, now expecting adjusted EBIT to be between $11.7 billion and $12.7 billion, compared to its previous forecast of $12 billion to $14 billion.
And GM is now looking at full-year 2024 adjusted EBIT estimates in the range of $12 billion to $14 billion initially last year. The company still expects adjusted earnings per share to be between $8.50 and $9.50 this year.
“There is a growing consensus that the U.S. economy, job market, and auto sales will continue to be resilient, and as GM's EV mix continues to grow, GM will continue to sell approximately 16 million vehicles,” said GM CEO and Chairman Mary. We expect healthy industry sales.” Barra said in a letter to his shareholders:
EV growth
When it comes to EV sales, GM experienced some stagnation in 2023 in its once aggressive rollout, but some softening is expected this year. In fact, a company spokesperson said GM will set aside $1.7 billion in reserves for losses related to existing EV inventory in the fourth quarter.
“It's true that the pace of EV growth is slowing, which creates some uncertainty,” Barra said, but based on current expectations for EV demand and production growth. GM said it expects to have “positive variable profits in the second half of this year.” .
GM Chief Financial Officer Paul Jacobson also reiterated the company's goals for EV profitability in a roundtable with reporters. “Profitability will not reach low single digits.” [EBIT EV margin] Until 2025,” he said.
GM has abandoned its goal of producing 400,000 EVs by mid-2024, but now says it will sell at least 250,000 EVs in 2024, depending on customer demand. The company did not say whether it expects EV production capacity to reach 1 million units by 2025.
Barra said on the earnings call that the company has the ability to refocus production and the “flexibility” to build more hybrid vehicles if needed, but reiterated that EV growth is the company's top priority. Ta.
In addition to restoring its profit outlook last November, GM unveiled a $10 billion “accelerated stock repurchase” (ASR) program aimed at increasing its common stock dividend by 33% starting in January. As opposed to traditional stock buybacks in stages, GM says its program will begin immediately.
“The entire team is focused on strong execution to maintain our company's momentum and create shareholder value, and we are deeply committed to and accountable for doing just that,” Barra said in the letter. ” he said.
Impact of the strike
Despite the UAW work stoppage, GM had built up sufficient inventory in preparation for the strike, so fourth-quarter sales were not dramatically affected. GM reported in early January that its fourth quarter U.S. sales rose 0.3% year over year, with approximately 625,176 cars and trucks sold.
Overall, GM announced that 2023 sales will increase 14.1% to 2.6 million vehicles, making it the company's best year since 2019. The company also increased its market share in the US by 0.3% to 16.3%. According to GM, the company ranked No. 1 in sales of full-size pickup trucks (841,000 units) and No. 1 in sales of full-size SUVs (245,000 units) in the United States.
GM also predicts that total U.S. auto industry sales will reach 16 million units in 2024, which would be a significant improvement post-pandemic. Car sales in 2022 will be just 13.4 million vehicles, the lowest in 10 years.
But overseas it's a different matter for GM. Jacobson said GM expects a loss in China in the first quarter. “The first quarter is going to be tough,” he said.
Another problem for GM involved issues related to its cruise AV division. In November, Cruise suspended all autonomous robot taxi operations in the U.S. after a Cruise robot taxi ran over a woman, stopped on top of her, and dragged her about 20 feet before pulling over. did. The woman was seriously injured in the accident. A few weeks later, Kyle Vogt, CEO of GM's Cruise self-driving division, announced he was stepping down from his role and leaving the company.
Mr. Cruz announced late last week that he was under investigation by regulatory agencies, including the Department of Justice and the SEC, regarding the incident in which he dragged a pedestrian and his actions in the immediate aftermath.
“At Cruise, we are committed to regaining the trust of regulators and the public through our commitments and actions,” Barra said.
Wedbush analyst Dan Ives said: “This quarter will restore confidence in the streets, which has been shaken in recent quarters by the fluid vision of EVs and the blackout in front of cruise passengers. “It was an important quarter that helped us.” tweeted on Tuesday morning.. “GM said it will spend $1 billion less on cruise than in 2023.''
Pras Subramanian is a reporter for Yahoo Finance.you can follow him twitter And even more Instagram.
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