General Motors has raised its financial targets for 2024 following strong performance in the second quarter that exceeded Wall Street expectations.
The Detroit-based automaker has adjusted its projected adjusted earnings for the year to a range of $13 billion to $15 billion, an increase from the prior estimate of $12.5 billion to $14.5 billion. Additionally, GM has raised its targets for operating cash flow and earnings per share. The forecast for net income attributable to shareholders was slightly reduced by less than 1%, now expected to be between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, a rise of over 7% compared to the same period last year, surpassing the anticipated figure of $45 billion according to FactSet estimates. Earnings per share reached $3.06, exceeding analysts’ expectations of $2.71 per share, and marking a 60% increase from 2023. Net income rose by 14% to $2.9 billion, up from $2.5 billion.
Following the announcement, GM’s stock rose nearly 5% in pre-market trading. The stock has increased over 37% this year. After market close on Monday, GM also declared a cash dividend for the third quarter, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the success of GM’s gasoline-powered trucks and SUVs, mentioning that the company is launching eight new or redesigned compact, mid-size, and full-size models in North America. She emphasized the scaling of production for the electric Chevrolet Equinox, stating that while the enthusiasm for electric vehicles remains high, GM will focus on disciplined growth.
Earlier this month, Barra acknowledged that GM is unlikely to meet its target of manufacturing 1 million electric vehicles in North America by the end of 2025 due to a market slowdown. The company plans to be flexible and “build to demand,” although it reported growth in electric vehicle sales last quarter.
Barra also revealed that Cruise, GM’s autonomous vehicle division, would stop production of its Origin vehicle, which had faced operational challenges after an incident last October. Instead, Cruise will concentrate on using the next-generation Chevrolet Bolt for testing in Texas and Arizona. GM incurred a $600 million charge due to the halted production of the Origin.
During an analysts’ call, Barra noted that utilizing the Bolt would address regulatory concerns about the unconventional design of the Origin, which lacked a steering wheel. This strategic shift is expected to reduce production costs and improve resource management.
“Our vision to transform mobility using autonomous technology remains steadfast, with each mile traveled and every simulation bringing us closer, as Cruise operates as an AI-first company,” stated Barra.
Additionally, GM is looking to restructure its joint venture in China with SAIC Motor as it continues to incur losses, reporting a $104 million loss for the second quarter. In June, SAIC-GM reduced production by 70%, delivering 26,000 vehicles, which is 50% less than the same period last year.