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General Motors (GM) shares jumped early Tuesday as the automaker reported profit jumped in the fourth quarter, driven again by record revenue and strong demand.
For the full-year, the company reported profits of $14.5 billion, near the high end of its forecast, amid what CEO Mary Barra called “strong customer demand” in a letter to shareholders.
For the quarter, GM reported:
On the profitability front, GM reported adjusted EBIT (earnings before interest and taxes) of $3.8 billion, beating estimates of $3.2 billion. GM also reported full-year adjusted EBIT of $14.5 billion, on the higher end of its prior guidance of $13 billion to $15 billion.
“GM led the U.S. industry in total sales and delivered the largest year-over-year increase in market share of any OEM, thanks to strong demand for our products and improved supply chain conditions,” Barra said in her shareholder letter.
GM shares were up as much as 9% in early trading Tuesday.
On the EV front, GM said the Chevrolet Bolt EV and Bolt EUV saw record sales for 2022, which demonstrated the “importance of affordable EVs in our portfolio.” Cheap EVs will be at the forefront in 2023, with rivals Tesla and Ford cutting prices for certain EV models this year alone.
GM also reported it is the number one truck leader in the market, selling 1.1 million full-size pickups, mid-size pickups, and full-size SUVs.
In terms of cost control, GM is being cautious with regards to new spending, and is targeting billions in cost savings, without impacting headcount.
“We’re being cautious today, we also rolled out a $2 billion cost reduction program over the next two years,” GM CFO Paul Jacobsen said to Yahoo Finance. “I want to be clear, we’re not considering any layoffs. As part of that, we’re going to manage headcount through attrition and targeted hiring for our priorities.” Jacobsen said the automaker would also pursue cost saving opportunities through “reduced complexity” in GM products.
For 2023, GM is forecasting adjusted EBIT of $10.5 billion-$12.5 billion, and adjusted EPS of $6.00-$7.00. “We expect that our momentum will help us deliver strong results once again in 2023,” Barra said.
Though talk of growing macro headwinds dominated Tesla and CEO Elon Musk’s commentary in the post earnings call, GM is not modeling a recession in its outlook, though it is maintaining flexibility in case the economic environment weakens.
“We’re not baking any recessions in [our forecast],” Jacobson said. “We’ve said going back to investor day that we were planning on a 15 million unit [US annual] market, it’s a little bit softer than kind of where we’ve seen demand for the last couple of years, but nothing that I would say is significant.”
On a separate note, GM also reported it has taken a stake in Lithium Americas worth $650 million to develop the largest known lithium mine in the U.S., located in Nevada. GM says the amount of lithium extracted and processed there will support 1 million EVs a year.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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