DETROIT — 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 5%.
The Michigan automaker upped its adjusted pre-tax profit projection for the yr to $12.5 billion to $14.5 billion, from its previous range of $12 billion to $14 billion.
“Our consumer has been remarkably resilient in this era of upper rates of interest,” GM Chief Financial Officer Paul Jacobson said.
He said demand held up well in the primary quarter and pricing was stable in April, but GM still is planning for pricing to say no 2% to 2-1/2% for the remaining of the yr.
Despite the corporate’s struggles in China and with EVs, stronger-than-expected vehicle pricing with gasoline-powered trucks pleased investors.
“There … is the truth that the pricing is staying stronger for longer than anybody anticipated,” said Tim Piechowski, portfolio manager at ACR Alpine Capital Research in St. Louis, which owns GM shares.
“The engine of the corporate is truck and SUV at this point,” he added. “They’re just generating substantial profit and free money flow that may proceed to fund the initiatives in EV. Full steam ahead.”
Some analysts were more cautious.
GM could lose additional market share within the near and intermediate term on account of its lack of hybrid gasoline-electric vehicles and money flow can be hampered by heavy planned spending on electric vehicles, CFRA Research analyst Garrett Nelson said in a research note.
The automaker reported that net income in the primary 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 common Wall Street goal of $2.15, in accordance with LSEG data. Revenue topped the Wall Street goal of $41.9 billion within the March quarter.
While the corporate began 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 yr after one among its self-driving cars dragged a lady down a San Francisco street. Company officials shared earlier this yr that GM would cut spending on this unit by $1 billion. The robotaxi business lost $2.7 billion last yr, not including $500 million in restructuring costs incurred within the fourth quarter because the unit cut staff. GM spent $400 million on Cruise in the primary quarter, and expects full-year expenses to hit about $1.7 billion.
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. She told analysts on a conference call that GM is exploring funding operations for Cruise, including taking outside investment.
GM’s business in China – previously the automaker’s largest market – has also been faltering. Chinese automakers and Tesla have wolfed up market share within the region, aided by deep price cuts and refreshed technology offerings.
GM lost $106 million in China within the quarter, which CFO Jacobson told reporters was lower than his team expected, because it worked through inventory.
Jacobson said the corporate expects a profit in China for the second quarter and the yr. Asked if GM would close or sell its business there, Barra said GM was committed long run to the world’s largest auto market.
“There is a place for GM to play and grow share,” she said of China.
The carmaker and its crosstown rival Ford Motor are counting on make the most of gas-engine trucks to ease investors’ concerns as they proceed to funnel money into costly EV development. GM said it gained greater than 3 points of market share in full-size pickup trucks within the quarter from rivals, which incorporates Ford and Stellantis.
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.
“We also proceed to see sequential and year-over-year improvements in profitability as we profit from scale, material cost and blend improvements,” Barra said.
The corporate’s three way partnership with LG Energy Solution, called Ultium Cells, is ramping up production of battery cells at plants in Ohio and Tennessee, Barra said.
Questions on the marketplace for battery-powered vehicles have increased as EV leader Tesla laid off greater 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 predicted to post its first revenue drop and lowest gross margin in nearly 4 years, in accordance with LSEG data.
GM outlined last yr a $10 billion stock buyback on the heels of reaching a costly recent labor agreement with the United Auto Employees union. The primary tranche of this was accomplished in the primary quarter, and the corporate is on course to scale back its outstanding share count to under 1 billion, Barra said.
This Article First Appeared At www.autoblog.com
