General Motors (GM) Chairman and Chief Executive Officer Mary Barra speaks at the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.
Patrick T. Fallon AFP | Getty Images
General Motors The company will make several investor-focused moves on Wednesday as it seeks to regain Wall Street’s confidence by 2024 after a tumultuous year of labor strikes and setbacks for electric and self-driving car plans.
The Detroit automaker plans to raise its quarterly dividend 33% next year to 12 cents a share; launch $10 billion in accelerated share repurchases; and restore its 2023 guidance, which includes about six weeks of support from the United Auto Workers union The impact of the strike is expected to be $1.1 billion on EBIT (or EBIT-adjusted EBIT).
GM Chief Executive Mary Barra said in a statement that the company is finalizing next year’s budget that will “fully offset the incremental costs of our new labor agreement, and we are executing on long-term plans that include lowering our business less capital intensive, develop products” even more efficiently and further reduce our fixed and variable costs. “
General Motors shares rose about 7% during premarket trading Wednesday. As of the announcement, the stock has fallen 14.1% year to date.
GM’s resumed 2023 guidance also includes:
- Net profit attributable to shareholders was US$9.1 billion to US$9.7 billion, compared with the previous forecast of US$9.3 billion to US$10.7 billion.
- Adjusted EBIT was $11.7 billion to $12.7 billion, compared with the previous forecast of $12 billion to $14 billion.
- Adjusted earnings per share, including share repurchases, were approximately $7.20 to $7.70, compared with the previous forecast of $7.15 to $8.15.
- Earnings per share, including share repurchases, were $6.52 to $7.02, compared with the previous forecast of $6.54 to $7.54
- Adjusted automotive free cash flow of $10.5 billion to $11.5 billion, compared with previous guidance of $7 billion to $9 billion
- Net automotive cash provided by operating activities was $19.5 billion to $21.0 billion, compared with the previous guidance of $17.4 billion to $20.4 billion
GM withdrew guidance when it reported third-quarter earnings on Oct. 24, citing volatility caused by UAW negotiations and labor strikes. On October 30, the two sides reached a preliminary agreement and the shutdown ended.
Before the UAW strike, Chief Financial Officer Paul Jacobson said the company was on track to achieve the “upper half” of its profit forecast.
At the time, GM said the UAW strike, which resulted in lost vehicle production, cost the automaker about $800 million in pretax earnings, including $200 million in the third quarter.
General Motors shares rose after a series of business updates on Wednesday.
General Motors said on Wednesday it expected capital expenditures in 2023 to be between $11 billion and $11.5 billion, down from its previous guidance of between $11 billion and $12 billion, due to previously announced delays in some new products and investments. (especially driven by plans for new products and investments related to electric vehicles).
Barra said in a letter to shareholders on Wednesday that she was “disappointed” with the next-generation electric vehicle the company will produce this year, called the Ultium vehicle.
She said the company expects “Ultium electric vehicle production to increase significantly and electric vehicle profit margins to increase significantly.”
GM said it plans to achieve low- to mid-single-digit adjusted EBIT margins on its electric vehicle portfolio by 2025 before the positive impact of clean energy tax credits.
cruise
Barra also said the automaker is “addressing challenges” at Cruise, its self-driving vehicle subsidiary.
Cruise recently issued a voluntary recall affecting 950 of its robotaxis and suspended all vehicle operations on public roads, following a series of incidents that drew attention from first responders, labor activists, and local elected officials, especially San Francisco) criticism.
The incidents, particularly an October incident involving a pedestrian, led to the resignation of CEO and co-founder Kyle Vogt from the company.
“Our top priority now is getting our team to focus on safety, transparency and accountability,” Barra said. “We must rebuild trust with regulators at the local, state and federal levels, as well as first responders and the communities where Cruise operates.”
stock buyback
Accelerated share buybacks include a total of $10 billion in funding for banks executing the program, including Bank of America, Goldman Sachs, Barclays Bank and Citibank.
GM will immediately receive and repossess $6.8 billion worth of common stock. Prior to the implementation of the plan, General Motors had issued approximately 1.37 billion shares of common stock.
The final total number of shares to be repurchased under the program will be determined at the end of the program, which is expected to occur in the fourth quarter. It will be based on an average of the daily volume-weighted prices of GM stock.
In addition to the announced plans, GM said it will have $1.4 billion of remaining capacity “for additional opportunistic stock repurchases” under its stock repurchase authorization.
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