Mary Barra, CEO, GM at NYSE, November 17, 2022.

Source: NYSE

Detroit – general motors It is raising its guidance for 2023 for the second time this year after the automaker reported second-quarter results on Tuesday that were up sharply year-over-year.

The Detroit automaker also said it is increasing cost-cutting measures over the next year and now plans to cut $3 billion in expenses compared to previous guidance of $2 billion.

GM Chief Financial Officer Paul Jacobson said the cuts would include sales, marketing spending, staffing salary and other costs.

General Motors shares closed Tuesday at $37.92, down 3.5%. The stock initially rose after early morning results before Wall Street analysts questioned the company’s rollout of new electric vehicles amid the supplier woes.

This is what General Motors reported In the second quarter:

  • Adjusted earnings per share: 1.91 USD. (This is not comparable to the $1.85 that analysts expect due to one-time items.)
  • he won: $44.75 billion vs. $42.64 billion expected, Refinitiv estimates

GM’s earnings included an unexpected $792 million charge for new business agreements between GM, LG Electronics and LG Power Solutions. The cost is a result of the automaker sharing expenses with companies for recalls of Chevrolet Bolt EV models in recent years, which LG companies were previously expected to pay.

With those charges in mind, the company reported adjusted earnings before interest and taxes of $3.23 billion.

On an unadjusted basis, the company reported net income attributable to shareholders of $2.57 billion, or $1.83 per share, up nearly 52% from the prior year when it generated $1.69 billion, or $1.14 per share.

Revenue for the quarter jumped 25% compared to $35.76 billion a year ago.

For the full year, GM raises its adjusted earnings forecast to a range of $12 billion to $14 billion, up from the previous range of $11 billion to $13 billion. GM also increased its adjusted free cash flow forecast for automobiles to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and net income attributable to shareholders from $9.3 billion to $10.7 billion, compared with a previous forecast of $8.4 billion to $9.9 billion.

Jacobson said the increase was the result of stronger-than-expected pricing, demand and capital discipline.

However, increased guidance hinges on GM successfully negotiating new labor agreements with the Federation of Canadian Auto Workers and Unifor unions this year without layoffs or strikes. The UAW has new leadership that has been overtly more confrontational than the union’s previous officers. Existing contracts covering nearly 150,000 unionized workers for Detroit automakers are set to expire on September 14.

General Motors CEO Mary Barra said on Tuesday Shareholder letter. “This is the best possible outcome for all of our key stakeholders, including our team, factory communities, dealers, suppliers and investors.”

The outage would add to years-long production woes in the auto industry caused by the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.

During the final round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a 40-day nationwide strike against GM. The automaker said the strike cost it about $3.6 billion that year.

For General Motors specifically, the outage could cost it hundreds of millions of dollars a week and delay ramping up production of its new electric cars, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, though he acknowledged that “it’s been a little challenging.”

Barra on Tuesday blamed an automation equipment supplier for the slow ramp of its new electric cars, after Wall Street criticized the company’s rollout of its latest electric vehicles.


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