General Motors is increasing its financial projections for 2024 after exceeding Wall Street’s expectations in its second quarter results.
The Detroit automaker has raised its forecast for adjusted earnings to a range of $13 billion to $15 billion, up from the previous estimate of $12.5 billion to $14.5 billion. Additionally, GM has increased its targets for operating cash flow and earnings per share, while slightly lowering the projected net income attributable to shareholders to between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, reflecting more than a 7% rise compared to the same period last year and surpassing the $45 billion anticipated by analysts, according to FactSet estimates. Earnings per share reached $3.06, exceeding the forecast of $2.71 and marking a 60% increase from 2023. The net income rose 14% to $2.9 billion, compared to $2.5 billion a year earlier.
Following the announcement, GM’s stock surged nearly 5% in pre-market trading and has jumped over 37% in value this year. Additionally, GM recently declared a third-quarter cash dividend, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the strong performance of the company’s gasoline-powered trucks and SUVs, noting that GM is launching eight new or redesigned vehicle models in North America. She emphasized that GM is ramping up production of the electric Chevrolet Equinox, stating a commitment to disciplined volume growth despite earlier admissions that the company would not achieve its goal of producing 1 million electric vehicles in North America by the end of 2025, citing market challenges. However, GM’s EV sales did see growth last quarter.
Barra also shared news about Cruise, GM’s autonomous vehicle division, which has decided to move away from its Origin vehicle model after operational setbacks. Instead, Cruise will focus on testing next-generation Chevrolet Bolt vehicles in Texas and Arizona. GM incurred a $600 million charge related to ceasing production of the Origin in Detroit.
During a call with analysts, Barra mentioned that opting for the Bolt would address regulatory concerns regarding the Origin’s unconventional design, which lacked a steering wheel. This strategic shift is expected to decrease unit costs and optimize resource allocation within the company.
GM is also working on restructuring its joint venture in China with SAIC Motor, which has been facing financial losses, including a $104 million loss in the second quarter. Production cuts at SAIC-GM resulted in a 70% reduction, delivering 26,000 vehicles, marking a 50% decline compared to the previous year.