General Motors removes guidance as it continues to negotiate with UAW

on Oct 24, 2023
  • General Motors reports better-than-expected results for its fiscal Q3.
  • CFO Paul Jacobson discussed the report with Bloomberg today.
  • GM stock is currently down more than 30% versus its year-to-date high.

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General Motors Co (NYSE: GM) is marginally in the red this morning even though it reported better-than-expected results for its fiscal third quarter.

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General Motors did not guide for the future

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The automaker did, however, refrain from guiding for the full year today because of the ongoing strike. According to Emmanuel Rosner – a Deutsche Bank analyst – the UAW walkouts have so far costed GM about 62,000 vehicles in total.

General Motors itself said recently that it took a $200 million hit due to the strike in the first two weeks only. Speaking with Bloomberg Television, Paul Jacobson – its Chief Financial Officer said today:

Decision to withdraw guidance was based on not wanting to speculate on the length or scope of the strike [even though] the underlying business was performing at the top end of our range prior to this.

He confirmed that the car manufacturer will update investors once the negotiations are successful. Shares of General Motors Co are currently down more than 30% versus their year-to-date high.

GM continues to negotiate with the UAW

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GM raised its offer last week to a 25% cumulative wage increase over four years on top of retirement benefits and profit sharing.

It’s the “most significant” proposal the automaker has ever sent to the United Auto Workers, as per CEO Mary Barra. Still, Shawn Fain – the President of UAW has already suggested that the union will ask for more. The finance chief also said on Tuesday:

We’re not going to sign a deal that doesn’t allow us to be competitive … I think this is another challenge, but one that we can rise to. I believe we still hit our goals.

Continued strike will likely weigh more prominently on the financial performance of the car company in the fourth quarter. Nonetheless, Wall Street has so far stuck to its “overweight” rating on General Motors.

General Motors saw solid growth in EV sales

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General Motors reported a 28% sequential growth in electric vehicles sales on Tuesday as it started delivering the Chevrolet Blazer EV in the third quarter.

The multinational forecasts continued increase in volume in its current financial quarter. Still, it’s a long way from a capacity of producing one million electric vehicles in North America – a milestone it hopes to hit by the end of 2025. According to CFO Jacobson:

We have to make sure that we can continue to price our vehicles and produce our vehicles profitably, which gives us the cash to be able to invest in the next generation.

GM recently announced plans of delaying electric truck production at Orion Assembly as Invezz reported here.

Notable figures in General Motors Q3 earnings report

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  • Earned $3.064 billion versus the year-ago $3.305 billion
  • Per-share earnings also declined from $2.25 to $2.20
  • Adjusted EPS printed at $2.28 as per the press release
  • Revenue jumped 5.5% year-on-year to $44.131 billion
  • Consensus was $1.87 a share on $42.482 billion revenue

General Motors saw its operating profit margin contract from 11.2% to 8.6% in the third quarter. Still, CEO Mary Barra said today in a press release:

We were profitable in every region, including China. And GM International excluding China is on track t deliver significantly higher EBIT-adjusted in 2023 compared to a year ago.

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