Despite the ongoing United Auto Workers (UAW) strike, which led to halted vehicle production and an $800 million pre-tax loss, General Motors (NYSE:GM) exceeded Wall Street's third-quarter earnings estimates. The strike resulted in a $200 million loss for GM in Q3 and a year-over-year decrease in net income by 7.3% and EBIT by 16.9%. This prompted the automaker to revise its annual guidance downward for adjusted earnings to between $12 billion and $14 billion, and net income for shareholders to between $9.3 billion and $10.7 billion.
The company posted revenues of $44.13 billion, marking a 5.4% YoY increase, outperforming analysts' expectations of $42.5 billion. Furthermore, the adjusted earnings per share (EPS) reached $2.28, a 1.3% YoY rise, surpassing the analysts' consensus estimate of $1.87.
While GM saw a 7% rise in earnings internationally, it suffered a significant 42% YoY decline in China. Amid these challenges, GM CEO Mary Barra announced a delay until late 2025 in electric truck production at the second Michigan plant to save around $1.5 billion in capital. However, she confirmed the launch of a new range of more profitable SUVs in 2022.
GM's Chief Financial Officer Paul Jacobson stated that the company anticipates a $2 billion cut in fixed costs by 2024 and a "low to mid-single-digit" electric vehicle (EV) margin by 2025. The Ohio plant is expected to reach full capacity by year-end, with EV capacity at 1 million units by 2025.
Analysts have given GM a Moderate Buy consensus rating (eight Buys, five Holds, two Sells), with a price target of $48.53, indicating a 66.1% upside potential.
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