General Motors beats quarterly results targets, raises forecast
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[April 23, 2024] By
Nora Eckert
DETROIT (Reuters) - General Motors on Tuesday posted quarterly results
that topped Wall Street targets and raised its annual forecast, citing
stable pricing and demand for its gas-engine vehicles, sending shares up
3.45% in pre-market trading.
The Michigan automaker upped its adjusted pretax profit projection to
$12.5 billion to $14.5 billion, from its previous stated range of $12
billion to $14 billion for the year.
“Our consumer has been remarkably resilient in this period of higher
interest rates,” GM Chief Financial Officer Paul Jacobson said.
The automaker reported that net income in the first quarter rose 24.4%
over the year-ago period to $3 billion, on a 7.6% rise in revenue to $43
billion.
Adjusted earnings per share of $2.62 beat the average Wall Street target
of $2.15, according to LSEG data. Revenue topped the Wall Street target
of $41.9 billion in the March quarter.
While the company started 2024 strong, CEO Mary Barra still has two
large challenges ahead: turning around GM's shrinking sales in China,
and salvaging Cruise, its robotaxi unit.
Cruise halted operations late last year after one of its self-driving
cars dragged a woman down a San Francisco street. Company officials
shared earlier this year that GM would cut spending on this unit by $1
billion. The robotaxi business lost $2.7 billion last year, not
including $500 million in restructuring costs incurred in the fourth
quarter as the unit cut staff. GM spent $400 million on Cruise in the
first quarter.
Barra said the business is making progress, citing the return of its
vehicles to roads in Phoenix, Arizona, earlier this month, with human
drivers and no passengers.
GM’s business in China – previously the automaker’s largest market – has
also been faltering. Chinese automakers and Tesla have gobbled up market
share in the region, aided by deep price cuts and refreshed technology
offerings.
GM lost $106 million in China in the quarter, which CFO Jacobson told
reporters was less than his team expected, as it worked through
inventory.
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The GM logo is seen on the facade of the General Motors headquarters
in Detroit, Michigan, U.S., March 16, 2021. REUTERS/Rebecca
Cook/File Photo
The carmaker and its crosstown rival Ford Motor are counting on
profit from gas-engine trucks to ease investors' concerns as they
continue to funnel cash into costly EV development.
GM has not broken out financial results for its EV business, but
Jacobson stuck to previous forecasts for turning a profit. He still
expects so-called variable profit, which excludes fixed costs, to be
positive by the second half of 2024.
Barra told investors in an earnings release: "We also continue to
see sequential and year-over-year improvements in profitability as
we benefit from scale, material cost and mix improvements."
The company's joint venture with LG Energy Solution, called Ultium
Cells, is ramping up production of battery cells at plants in Ohio
and Tennessee, Barra said.
Questions about the market for battery-powered vehicles have
increased as EV leader Tesla laid off more than 10% of its global
staff earlier this month and slashed prices on its models across
several markets.
Tesla will release quarterly earnings on Tuesday, and the EV maker
is expected to post its first revenue drop and lowest gross margin
in nearly four years, according to LSEG data.
GM outlined last year a $10 billion stock buyback on the heels of
reaching a costly new labor agreement with the United Auto Workers
union. The first tranche of this was completed in the first quarter,
the company said.
(Reporting by Nora Eckert in Detroit; Editing by Peter Henderson and
Matthew Lewis)
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