General Motors made more money than expected so far this year, even as union contracts reached last year increased labor costs, its customers faced higher interest rates to buy cars and its electric vehicles still aren’t turning a profit — yet.
But GM said it expects its North American EV business to turn a profit in the second half of the year. That and strong demand for traditional gasoline-powered vehicles allowed it to raise its earnings forecast for the year.
Reaching a profit on its EV business would be a major milestone, which have yet to make the kind of cash that hybrids and gasoline-powered cars make for traditional automakers, who are planning a shift to EVs in the years ahead. GM officials said Tuesday it believes its EV offerings will be even more profitable moving into 2025, despite the slowdown in growth of demand for EVs in its home market.
The company said that it had adjusted net income of $3.0 billion, down 2% from the $3.1 billion it reported on that basis a year earlier. But the company announced a $10 billion share repurchase last fall following its labor deal with the United Auto Workers union. The fewer number of shares outstanding allowed it to report improved earnings per share, which is closely watched by investors. That resulted in adjusted earnings per share of $2.62, up 18.6%, easily topping forecasts that EPS would slip to $2.13.
Revenue rose 7.6% to $43 billion, which also topped forecasts by $2 billion, despite a 3% slip in the number of vehicles sold to 1.3 million cars and trucks. But that drop in total vehicle sales came from the company pulling back on lower-priced sales to fleet customers, such as rental car companies, and concentrating more on retail sales to consumers. Fleet sales fell to nearly 16% of its overall sales, down from 19 % of year-ago sales.
More significantly it raised its full-year earnings forecast to between $10.1 billion and $11.5 billion, which is up $300 million from its earlier guidance. And it raised its adjusted earnings before interest and taxes guidance for the year by $500 million.
The EPS and revenue beats and the stronger guidance helped lift shares of GM by 4% in premarket trading.
Source: CNN
