General Motors has updated its financial forecast for 2024 following a strong performance in the second quarter that exceeded Wall Street’s expectations.
The Detroit-based automaker has increased its projected adjusted earnings for the year to a range of $13 billion to $15 billion, an increase from the previous estimate of $12.5 billion to $14.5 billion. Additionally, targets for operating cash flow and earnings per share have been raised, although the anticipated net income attributable to shareholders has been adjusted down slightly to between $10 billion and $11.4 billion.
In the second quarter, GM reported revenue of $47.9 billion, marking a 7% increase compared to the same period last year and surpassing Wall Street expectations of $45 billion, as per FactSet estimates. Earnings per share reached $3.06, outpacing the analysts’ forecast of $2.71 and up 60% from 2023. The company also saw a 14% increase in net income, rising to $2.9 billion from $2.5 billion.
Following the announcement, GM’s stock rose nearly 5% in pre-market trading and has increased more than 37% throughout the year. The company also declared a third-quarter cash dividend on Monday, further boosting investor confidence.
In a letter to shareholders, CEO Mary Barra highlighted the strong performance of GM’s gas-powered trucks and SUVs while also discussing the introduction of eight new or redesigned models in North America. Barra emphasized GM’s commitment to production growth in electric vehicles, particularly the Chevrolet Equinox, contrasting it with the company’s earlier goal of producing 1 million electric vehicles in North America by the end of 2025, which may not be met due to recent market slowdowns.
Barra also announced that Cruise, GM’s self-driving subsidiary, would discontinue its Origin vehicle to focus on the next-generation Chevrolet Bolt for testing in Texas and Arizona. This decision comes after a $600 million production halt charge related to the Origin’s suspension in Detroit.
During an analyst call, Barra stated that using the Bolt would address regulatory concerns associated with the Origin’s unconventional design, such as its absence of a steering wheel. This shift is expected to reduce costs and improve resource allocation for GM.
Lastly, GM is working to restructure its joint venture in China with SAIC Motor, which has been reporting losses, including a $104 million loss in the second quarter. In June, SAIC-GM reduced production by 70%, delivering only 26,000 vehicles, a 50% decline from the previous year, according to Automotive News.