GM said the strike cost it $1.1 billion. But it could post a record profit this year
By Chris Isidore, CNN
New York (CNN) — A 46-day strike took only a modest bite out of General Motors earnings for 2023, and America’s largest automaker said it expects profit to bounce back to near or above record levels this year regardless of the higher labor costs, forecasts of weaker car prices and other headwinds.
The automaker said it expects 2024 adjusted earnings of between $9.8 billion to $11.2 billion, which could top the record $11 billion it earned on that basis in 2022.
The company reported adjusted net income of $1.6 billion in the fourth quarter, or $1.24 a share. That’s down 46% from a year earlier, partly due to the $1.1 billion cost of the strike, most of which came in the fourth quarter.
But its results were much better than the forecast of $1.16 a share from analysts surveyed by Refinitiv. Revenue of $43 billion in the quarter, down less than 1% from a year earlier, also beat forecasts. Full year adjusted earnings slipped only 5% to $10.5 billion.
The company expects labor costs to increase by $1.3 billion this year, after the deal with the United Auto Workers union that gave immediate 14% raises to 45,000 UAW members at the company. It will partly balance that by $1 billion in cost cuts, including reduced spending on marketing and engineering.
The company expects to spend more on incentives to car buyers in 2024 than it spent in 2023, which will be a headwind for revenue and profitability, and a first quarter loss in China, the largest market for industrywide sales and GM’s second largest market behind the United States. It still aims to have its electric vehicle business finally become profitable in the second half of this year.
“It’s true the pace of EV growth has slowed, which has created some uncertainty,” said CEO Mary Barra in a letter to employees and shareholders. “But many third-party forecasts have US EV deliveries rising from about 7% of the industry in 2023 to at least 10% in 2024, which would mean another year of record EV sales.”
Shares of GM (GM) jumped more than 8% in early trading on the report and guidance.
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