June 21, 2024
Finance

GM reports Q4 sales and profit beat, issues improved profit outlook but admits EV pace has slowed


General Motors (GM) reported a top and bottom line beat for the fourth quarter, and issued 2024 full-year profit guidance that matched its initial forecast for 2023 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 in the automaker jumped over 7% in premarket trading after the financial update’s release.

For the quarter, GM reported topline revenue of $42.98 billion, beating the $39.53 billion consensus Bloomberg estimate, although this figure was down compared with the $43.1 billion the company reported in Q4 2022. On the profitability front, GM reported adjusted earnings per share of $1.24 versus $1.16 estimated, on adjusted EBIT (earnings before interest and taxes) of $1.757 billion, though that figure dropped 53.8% versus a year ago.

For the year, GM earned $12.4 billion in adjusted EBIT; in late November GM reinstated its full-year outlook, expecting adjusted EBIT of $11.7 billion to $12.7 billion, compared with its previous outlook of $12 billion to $14 billion.

And it was last year’s initial $12 billion to $14 billion range that GM now sees as its full-year 2024 adjusted EBIT forecast. The company also sees $8.50 to $9.50 in adjusted earnings per share for the year as well.

“Consensus is growing that the US economy, the job market and auto sales will continue to be resilient, and at GM, we expect healthy industry sales of about 16 million units with the mix of EVs continuing to grow,” GM CEO and chair Mary Barra said in her shareholder letter.

EV growth

As for EV sales, GM suffered some hiccups in 2023 with its once-aggressive rollout, and some softness is expected this year. In fact a company spokesperson said GM will have $1.7 billion in reserves for losses relating to existing EV inventory in Q4.

“It’s true the pace of EV growth has slowed, which has created some uncertainty,” Barra said, though she expects GM to become “variable profit positive in the second half of the year” based on our current expectations for EV demand and production growth.

GM CFO Paul Jacobson also reiterated the company’s goal for EV profitability in a roundtable call with reporters. “We won’t get to low to single digit profitability [EBIT EV margin] until 2025,” he said.

GM, which abandoned its goal of building 400,000 EVs through mid-2024, did not say whether it still expects to have 1 million units of EV capacity by 2025.

SAN MARCOS, TEXAS - JANUARY 03: A GMC vehicle is seen for sale on the Chuck Nash dealership lot on January 03, 2024 in San Marcos, Texas. Auto sales rose sharply within the first nine months of 2023, with analysts projecting a 13% increase from the prior year once all automakers release their figures. Pent-up demand and the alleviation of shortages due to supply chain hiccups and labor disruptions is being attributed to the gains. (Photo by Brandon Bell/Getty Images)

A GMC vehicle is seen for sale on the Chuck Nash dealership lot on Jan. 3, 2024, in San Marcos, Texas. (Brandon Bell/Getty Images) (Brandon Bell via Getty Images)

In addition to reinstating its profit outlook last November, GM revealed a $10 billion “accelerated share repurchase” (ASR) program with the intention of boosting its common stock dividend by 33% starting in January. As opposed to a traditional staged share buyback, GM says its program will begin immediately.

“Everyone on the team is focused on strong execution to sustain our momentum and create shareholder value, and we are deeply committed and accountable to do exactly that,” Barra said in her letter.

Impact of strikes

Despite the UAW work stoppage, GM’s sales for Q4 were not dramatically affected, as the company said it had built up sufficient inventory in anticipation of strike. Earlier in January GM reported Q4 US sales increased 0.3% compared to the same period a year ago with roughly 625,176 cars and trucks 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 grew its market share by 0.3% to 16.3% overall in the US. GM said it was No. 1 in full-size pickup sales in the US (841K units) and No. 1 in full-size SUV sales (245,000 units).

GM also forecast total US auto industry sales to hit 16 million in 2024, which would be a strong improvement post-pandemic; only 13.4 million vehicles were sold in 2022, the lowest in a decade.

Overseas however is a different matter for GM. Jacobson said GM is projecting a loss in China for Q1. “We’re gonna have a tough first quarter there,” he said.

Another hiccup for GM involved issues related to its Cruise AV business unit. In November, Cruise paused all autonomous activities across the country with its robotaxis after an accident where a Cruise robotaxi ran over a woman, stopped on top of her, and then dragged her for about 20 feet before pulling over. The woman suffered severe injuries from the accident. A few weeks later Kyle Vogt, CEO of GM’s Cruise autonomous driving division, announced he was resigning from his role and leaving the company.

Late last week, Cruise revealed it was under investigation by the Department of Justice and SEC, among other regulatory bodies, concerning the incident with the pedestrian who was dragged and Cruise’s actions in the immediate aftermath of the event.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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