General Motors (GM) exceeded expectations for both revenue and profit in the fourth quarter and has projected a 2024 full-year profit that aligns with its 2023 forecast. This positive financial report comes as GM aims to recover from the impact of the UAW strike and adjust its electric vehicle rollout, which has introduced some uncertainty. Following the release of the Q4 earnings, GM’s stock surged over 9% in early trading, reaching its highest levels since July 2023. GM reported quarterly revenue of $42.98 billion, surpassing the estimated $39.53 billion, although this figure was slightly down from the $43.1 billion reported in Q4 2022. Additionally, GM’s adjusted earnings per share were reported at $1.24, beating the estimated $1.16, and adjusted EBIT stood at $1.757 billion, a 53.8% decrease from the previous year. For the full year, GM earned $12.4 billion in adjusted EBIT, aligning with its reinstated full-year outlook from November, projecting adjusted EBIT between $11.7 billion and $12.7 billion. GM anticipates full-year 2024 adjusted EBIT between $12 billion and $14 billion, with an expected adjusted earnings per share of $8.50 to $9.50.
“There is a growing consensus that the US economy, job market, and auto sales will remain strong, with a growing mix of electric vehicles,” said GM CEO Mary Barra in her shareholder letter. GM faced challenges in 2023 with its electric vehicle rollout, resulting in some setbacks this year. The EV growth rate has slowed, leading to uncertainty. Barra expects GM to achieve positive variable profit in the second half of the year based on current expectations for EV demand and production growth. GM’s CFO, Paul Jacobson, emphasized the company’s goal for EV profitability, stating that they do not anticipate reaching low to single digit profitability (EBIT EV margin) until 2025. GM has revised its EV sales target, aiming to sell at least 250,000 EVs in 2024, depending on customer demand. The company, however, did not confirm whether it still aims to reach 1 million units of EV capacity by 2025.
Barra reiterated that the company has the flexibility to shift production to prioritize EVs and that EV growth remains its top priority. In addition to reinstating its profit outlook, GM announced a $10 billion accelerated share repurchase program to boost its common stock dividend by 33% beginning in January. Despite the UAW work stoppage, GM’s Q4 sales were not significantly affected, as the company had anticipated the strike and built up sufficient inventory. Earlier in January, GM reported a 0.3% increase in Q4 US sales compared to the same period the previous year, with approximately 625,176 cars and trucks sold.
GM also anticipates a total of 16 million vehicles to be sold in the US in 2024, signaling a strong recovery from the pandemic, as only 13.4 million vehicles were sold in 2022, the lowest in a decade. However, GM is projecting a loss in China for Q1. Overseas, GM encountered challenges related to its Cruise AV business unit, as all autonomous activities were paused following an accident where a Cruise robotaxi injured a pedestrian. Cruise is under investigation by regulatory bodies concerning the incident and its immediate aftermath. Despite these challenges, GM remains committed to regaining trust and confidence, particularly in the area of electric vehicles.
“This quarter was crucial in bolstering investor confidence, especially given the uncertainty surrounding GM’s electric vehicle strategy and the issues faced by Cruise,” tweeted Wedbush analyst Dan Ives on Tuesday morning. “GM plans to spend $1 billion less on Cruise compared to 2023.”Contrary to traditional staged share buybacks, GM’s accelerated share repurchase program will commence immediately to enhance shareholder value and sustain its positive momentum, as emphasized by CEO Mary Barra.
