Mary Barra, CEO and Managing Director, New York Stock Exchange, November 17, 2022.

Source: NYSE

Detroit- General Motors The automaker raised its guidance for 2023 for the second time this year after the automaker reported a sharp year-over-year increase in its second-quarter results on Tuesday.

The Detroit automaker also said it would ramp up cost-cutting measures next year and now plans to cut spending by $3 billion, compared with previous guidance of $2 billion.

GM Chief Financial Officer Paul Jacobson said the cuts would include sales and marketing expenses, payroll and other costs.

What’s this gm report Q2:

  • Adjusted earnings per share: $1.91. (That missed analysts’ expectations of $1.85 due to one-time items.)
  • income: The figure came in at $44.75 billion, compared with expectations for $42.64 billion, according to a Refinitiv consensus estimate

GM’s earnings included an unexpected $792 million charge for a new commercial agreement between GM and LG Electronics and LG Energy Solutions. The cost is the result of the automaker sharing with the companies the costs of recalling Chevrolet Bolt EV models in recent years, which were previously expected to be paid by LG.

With that and others in mind, the company reported adjusted EBIT of $3.23 billion, or $1.91 per share.

On an unadjusted basis, the company reported net income attributable to shareholders of $2.57 billion, or $1.83 per share, up nearly 52% from $1.69 billion, or $1.14 per share, a year earlier.

Revenue for the quarter was up 25% from $35.76 billion a year earlier.

GM raised its full-year adjusted profit forecast to $12 billion to $14 billion from a previous forecast of $11 billion to $13 billion. GM also raised its adjusted automotive free cash flow forecast to $7 billion to $9 billion from $5.5 billion to $7.5 billion, and its shareholder net profit forecast to $9.3 billion to $10.7 billion from $8.4 billion to $9.9 billion.

Jacobson said the hike was the result of stronger-than-expected pricing, demand and capital discipline.

However, the guidance increase is contingent on GM successfully negotiating a new labor deal with the UAW and Unified Canada this year without work stoppages or strikes. The UAW’s new leadership has been more confrontational in public than previous union officials. Contracts currently covering about 150,000 unionized workers at the Detroit automaker expire on Sept. 14.

“We have a long history of negotiating fair contracts with both unions that reward our workers and support the long-term success of our business. Our goals will be no different this time,” GM Chief Executive Mary Barra said in a statement Tuesday. shareholder letter. “This is the best outcome for all of our key stakeholders, including our teams, factory communities, dealers, suppliers and investors.”

The shutdown will exacerbate years of production problems in the auto industry caused by the coronavirus pandemic and severe supply chain constraints such as semiconductor chips.

For GM in particular, the shutdown could cost it hundreds of millions of dollars a week and delay production of its new electric vehicles, which the automaker is already slow to produce. Jacobson said GM produced 50,000 electric vehicles in North America in the first half of this year, but acknowledged that “it’s been a little bit challenging.”

The automaker will reveal more about the slow production of its new electric vehicles during an analyst call Tuesday, he said.

Ahead of Tuesday’s results, GM beat earnings estimates 86 percent of the time, according to Bespoke. However, the stock rose an average of only 0.17% on earnings days.

GM shares are up about 16% this year. It closed at $39.30 a share on Monday, down from a 52-week high of $43.63 a share set in February.

The story is developing. Please check for updates.

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