GM Beats Wall Street Expectations, Forecasts Continued Strong Profit in FY 2024

GM CRUSHES Wall Street! Bets BIG on EV! Is This the END of Tesla’s Reign?

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General Motors (GM) roared past Wall Street’s expectations for the fourth quarter and full year 2023, projecting continued strong financial performance in 2024 despite headwinds from potential economic and sales slowdowns. The Detroit automaker’s upbeat outlook sent shares soaring over 8% in early Tuesday trading.

Highlights:

  • 2024 Guidance: GM expects net income of $9.8 billion to $11.2 billion, adjusted EBIT of $12 billion to $14 billion, and adjusted automotive free cash flow of $8 billion to $10 billion. This surpasses many analysts’ forecasts of flat results compared with 2023.
  • Q4 Highlights: GM beat top- and bottom-line estimates, reporting adjusted EPS of $1.24 versus $1.16 expected and revenue of $42.98 billion versus $38.67 billion expected.
  • Full Year 2023: Revenue increased 10% year-over-year to $171.84 billion, with net income of $10.13 billion and adjusted EBIT of $12.36 billion.
  • China Challenges: GM’s second-largest market remained a struggle, with equity income declining 34% for the year and 54% in Q4. The company expects flat results in China for 2024, including a first-quarter loss.
  • Cruise Spending Cuts: GM plans to spend roughly $1 billion less on its embattled Cruise autonomous vehicle unit in 2024 compared to $2.7 billion in 2023. The company is implementing changes following investigations into the fatal October accident and operational issues.
  • EVs: GM acknowledges slower-than-expected EV adoption but remains committed to expanding its lineup and sales in 2024. The company reiterated plans for 1 million additional units of EV production capacity in North America by 2025.

Financial Performance Compared to Estimates:

MetricActualEstimate
Adjusted EPS (Q4)$1.24$1.16
Revenue (Q4)$42.98 billion$38.67 billion
Net Income (Full Year)$10.13 billion
Adjusted EBIT (Full Year)$12.36 billion

Regional Performance:

RegionAdjusted EBIT (Q4)YoY Change
North America$2.01 billion-45%
International$269 million-1.1%
China$446 million-34%

Cruising Past Forecasts:

  • GM’s 2024 guidance shines bright, projecting net income of $9.8 billion to $11.2 billion, or $8.50 to $9.50 per share, and adjusted earnings before interest and taxes (EBIT) of $12 billion to $14 billion.
  • Adjusted automotive free cash flow is expected to land between $8 billion and $10 billion.
  • This bullish outlook outpaces GM’s 2023 results and exceeds many analysts’ expectations of flat 2024 performance.

Smooth Sailing for Investors:

  • GM shares surged over 8% in early Tuesday trading, reflecting investor confidence in the company’s resilience and growth potential.
  • This follows a 7% rise in 2023, further bolstered by a $10 billion share repurchase program announced in November.

Fourth Quarter Performance:

  • Adjusted earnings per share surpassed estimates, clocking in at $1.24 versus $1.16 expectations.
  • Revenue remained steady year-over-year at $42.98 billion.
  • Net income for stockholders dipped slightly to $2.1 billion ($1.59 per share) compared to $2 billion ($1.39 per share) in the prior year’s fourth quarter.

Regional Navigations:

  • North American adjusted earnings faced choppy waters, declining 45% to $2.01 billion, while international operations held steady at $269 million.
  • China, a persistent storm cloud, witnessed a 34% drop in equity income for the year, with a particularly rough 54% tumble in the fourth quarter.
  • GM anticipates its China operations to remain flat in 2024, with a projected first-quarter loss.

Cruise Control Adjustments:

  • GM plans to throttle back spending on its embattled autonomous vehicle subsidiary Cruise, aiming for roughly $1 billion less investment compared to 2023’s $2.7 billion (excluding special items).
  • The company is implementing significant changes following internal and third-party investigations into a fatal pedestrian accident and operational concerns.
  • Cruise remains under scrutiny by federal and state authorities.

EV Voyage Continues:

  • Both CEO Mary Barra and CFO Paul Jacobson acknowledge slower-than-expected EV adoption in the U.S. but reiterate their commitment to expanding the company’s EV lineup and sales in 2024.
  • GM expects healthy industry sales of around 16 million units, with a growing EV mix.
  • Despite production problems with its Ultium EVs, the company maintains its goals of adding 1 million units of EV production capacity in North America and achieving a mid-single-digit EBIT EV margin by 2025.
Metric2023 Actual2024 Guidance
Net Income Attributable to Stockholders$10.13 billion$9.8 billion – $11.2 billion
Adjusted EBIT$12.36 billion$12 billion – $14 billion
Adjusted Automotive Free Cash Flow$7.6 billion$8 billion – $10 billion
North American Adjusted Earnings$12.31 billionN/A
International Adjusted Earnings$1.21 billionN/A
China Equity Income$446 millionFlat (anticipated first-quarter loss)

Key Quotes:

  • “As we begin 2024, I believe GM is well positioned for another year of strong financial performance,” – GM CFO Paul Jacobson
  • “The team is doing a good job of managing through a challenging situation but we’re going to have a tough first quarter,” – Jacobson on China
  • “At Cruise, we are committed to earning back the trust of regulators and the public through our commitments and our actions,” – GM CEO Mary Barra

Looking Ahead:

GM’s strong performance and bullish outlook suggest the automaker is well-positioned to weather potential economic and sales headwinds in the coming year. However, challenges remain, including the ongoing struggle in China and investigations surrounding Cruise. The company’s ability to navigate these challenges and execute on its EV plans will be key to its long-term success.

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