KEY POINTS
General Motors on Tuesday raised its 2024 guidance after beating Wall Street’s top- and bottom-line expectations for the first quarter.
GM’s North American operations, driven by truck sales, were largely responsible for the company’s first-quarter beat and guidance raise, the automaker said.
GM CFO Paul Jacobson said prices for the automaker’s vehicles were roughly flat to slightly down during the quarter.
After exceeding both Wall Street’s top and bottom line expectations for the first quarter, General Motors increased its guidance for 2024 on Tuesday.
GM had previously projected adjusted earnings of $12 billion to $14 billion, or $8.50 to $9.50 per share; additionally, it anticipated net income attributable to stockholders of between $10.1 billion and $11.5 billion, or $8.94 and $9.94 per share, up from $9.8 billion to $11.2 billion.
The Detroit automaker also increased its earlier forecast of $8 billion to $10 billion for adjusted automotive free cash flow to a range of $8.5 billion to $10.5 billion.
After the report, GM’s stock price increased by over 4%.
The following represents the company’s first-quarter performance in comparison to LSEG’s average estimates:
adjusted earnings per share versus expected earnings per share of $2.15
Income: $43.01 billionas opposed to the anticipated $41.92 billion
Sales for the first three months of this year, according to General Motors, increased 7.6% from about $40 billion in the same period last year. A 26% increase in net income to $2.95 billion was seen in the first quarter.
After deducting certain dividend payments, the automaker’s net income attributable to stockholders increased by 24.4% to $2.98 billion, or $2.56 per share, in the first quarter of 2023 compared to $2.4 billion, or $1.69 per share, claimed by the company in the same period the previous year.
After deducting interest and taxes, the automaker’s adjusted earnings for the first quarter came to $3.87 billion, or $2.62 per share.
The major factor behind the company’s first-quarter beat and guidance increase, according to GM, was its North American operations, which are primarily driven by truck sales.
Along with helping to offset losses of $106 million in China and $10 million in other international markets during the first three months of the year, the division increased adjusted earnings during the quarter to $3.84 billion, up 7.4% from a year earlier.
A 10.6% adjusted profit margin was achieved by GM in the region for the period, surpassing its previously declared range of 8% to 10% for the year, thanks to steady car prices and increased sales at retail in North America.
Paul Jacobson, the CFO at General Motors, stated that while prices for the company’s cars were down during the quarter, they were not as much as the 2% to 2.5% decline the company had projected for the entire year.
Jacobson informed reporters during a briefing that “our consumer has been remarkably resilient in this period of higher interest rates.” “We believe we can perform well in this environment,”
He added that, compared to the company’s initial projections, the loss in China was “slightly better.”
With regard to its all-electric vehicles, General Motors (GM) specifically stated that production is still ramping up after production bottlenecks, particularly with regard to battery modules, while sales of its extremely profitable pickups are still strong.
CEO of GM Mary Barra wrote in a letter to shareholders, “As we continue to strengthen our [internal combustion engine] portfolio, scale EVs and reinvest in the business, we are extremely committed to improving profitability and free cash flow, capital efficiency, and we’ll keep working to maximize shareholder value.”
200,000–300,000 EVs will still be produced in 2024, according to Jacobson of the company.
Even though the automaker’s business in North America is still thriving, the number of cars on the road in the US is increasing. Beyond the automaker’s prior guidance of 50 to 60 days, the company ended the first quarter with a 63-day supply of vehicles.
In advance of the spring and summer selling season, which includes some factory shutdowns for retooling, Jacobson stated that while the company is keeping an eye on those levels, it is not overly concerned about the quantity of vehicles.
“We actually feel pretty good about where we are,” the man said.
We are obviously keeping a watch on it.
In the first quarter, GM’s financing division recorded adjusted earnings of $737 million, a 4.4% decrease from the same period last year.