GM beats third-quarter results, raises profit forecast for third time this year

General Motors (GM) gave investors something to cheer about early Tuesday morning after the automaker raised its forecast for the third time this year, in addition to easily beating revenue and profit expectations for the third trimester.

For the quarter, GM reported revenue of $48.78 billion, well above Bloomberg consensus estimates of $44.69 billion, and higher than the previous quarter’s nearly $48 billion. GM’s third-quarter revenue was also 10.5% higher than last year.

The company reported adjusted EPS (earnings per share) of $2.96, far exceeding expectations of $2.44. It reported EBIT-adjusted profit of $4.115 billion, up 15.5% from a year ago, with the EBIT-adjusted margin climbing to 8.4% from 8.1 % over one year.

Shares of GM rose about 2% in premarket trading following the earnings release.

In terms of guidance, GM made the following upward revisions to its full-year 2024 guidance:

  • Adjusted EBIT: $14.0 billion to $15.0 billion ($13.0 billion – previously $15.0 billion)

  • Automotive operating cash flow: $22.0 billion – $24.0 billion ($19.2 billion – previously $22.2 billion)

  • Auto sector adjusted free cash flow: $12.5 billion – $13.5 billion ($9.5 billion – previously $11.5 billion)

  • Adjusted diluted EPS: $10.00 – $10.50 ($9.50 – previous $10.50)

“I am proud that GM is delivering our best vehicles with strong financial results. But I want to be clear: we do not confuse progress with victory,” GM CEO Mary Barra wrote in her letter to shareholders. “Competition is fierce and the regulatory environment will continue to tighten. This is why we are focused on optimizing our ICE margins and making our electric vehicles profitable on an EBIT basis as quickly as possible. “

GM Chief Financial Officer Paul Jacobson added on a media call that while reducing GM’s stock count by 19% via buybacks provided a “tailwind” to rising EPS, the increase in profits was more due to the earnings power of the company’s core businesses.

IN Q3, GM delivered 659,601 vehicles, down 2% from last year; however, retail sales increased 3%. GM said it delivered more vehicles than any other automaker in the United States during the quarter.

Unsurprisingly, GM’s sales of pickup trucks and full-size SUVs led the way, but sales of electric vehicles were also a highlight. Amid a decline in sales of the Bolt EV, GM’s other EV models picked up the slack with sales of 32,195 EVs in total, up 60% from a year ago.

Unsold 2024 Lyriq electric utility vehicles are lined up outside a Cadillac dealership, Sunday, June 2, 2024, in Lone Tree, Colo. (AP Photo/David Zalubowski)Unsold 2024 Lyriq electric utility vehicles are lined up outside a Cadillac dealership, Sunday, June 2, 2024, in Lone Tree, Colo. (AP Photo/David Zalubowski)

Unsold 2024 Lyriq electric utility vehicles are lined up outside a Cadillac dealership, Sunday, June 2, 2024, in Lone Tree, Colo. (AP Photo/David Zalubowski) (ASSOCIATED PRESS)

Jacobson said at GM’s investor day earlier in October that the company still targets electric vehicle profitability based on a positive variable profit margin, despite the fact that it has reduced its vehicle production volume electric vehicles to 200,000 units for the year, from 200,000 to 250,000. The company plans to reduce electric vehicle costs by $2 billion to $4 billion in 2025.

During the media call, Jacobson explained why variable profit is so important. “Variable profit is a very important step on the path to profitability. It means you’ve reached an inflection point,” he said, where increasing sales start to eat into high fixed costs. “As we grow, our EBIT losses start to decline,” he added.

At its investor day, GM said peak EV losses in 2024 “will help (in) future years as we expect EV EBIT to significantly improve.”

Looking ahead, Barra said GM expects 2025 adjusted EBIT to be in a similar range to full-year 2024 results, as the company said at its annual earnings day. investors.

This story is developing.

Pras Subramanian is a journalist for Yahoo Finance. You can follow it X and on Instagram.

For the latest earnings reports and analysis, earnings whispers and expectations, and company earnings news, click here.

Read the latest financial and business news from Yahoo Finance

Leave a Comment