GM withdraws guidance due to auto strikes
GM shares were largely flat on Tuesday after the company reported third-quarter results.
Yahoo Finance’s Pras Subramanian reports:
Amid painful collective bargaining with the United Auto Workers (UAW) union, GM (GM) on Tuesday reported third-quarter sales and profit growth but withdrew its 2023 forecast due to uncertainty over labor strikes.
GM Chief Financial Officer Paul Jacobson said the company was on track to meet its previously announced profit guidance of $12 billion to $14 billion in EBIT (earnings before interest expense and taxes) and net income attributable to shareholders of $9.3 billion to $10.7 billion corrected below.
For the third quarter, GM reported revenue of $44.13 billion (versus estimated $43.01 billion), up 5.4% year over year. In terms of profitability, GM reported adjusted earnings per share of $2.28 (versus expected $1.84) on net income of $3.06 billion.
Jacobson also said the labor strikes that began in mid-September cost the automaker about $800 million in pretax profits due to lost vehicle production, including $200 million in the third quarter.
In addition to strikes at GM plants in Wentzville, Missouri, and Lansing, Michigan, the UAW is also striking at all GM parts and distribution centers, affecting the automaker’s ability to service its customers’ cars and send parts to other assembly plants to deliver. On Monday morning, the UAW expanded its strikes at GM rival Stellantis, pulling more than 6,000 workers from Stellantis’ highly profitable Ram truck plant in Sterling Heights, Michigan.
Earlier this month, GM suggested third-quarter profit could fall by $200 million due to the ongoing strike. JPMorgan analyst Ryan Brinkman estimates GM is likely losing $21 million a day due to plant and parts distribution center closures.
GM is also moderating its investments in electric vehicles. Last week, GM said it was delaying the expansion of its electric trucks and postponing the conversion of an electric truck plant until late 2025 to “better manage capital investments while adapting to evolving demand for electric vehicles.”
“We are also moderating the acceleration of electric vehicle production in North America to protect our prices, adapt to slower near-term demand growth, and implement technical efficiencies and other improvements that will make the production of our vehicles more cost-effective and profitable,” CEO Mary Barra said in their letter to shareholders.