By Tom Krisher, AP Auto Writer
Rising factory output led to strong US sales at the end of last year, pushing General Motors’ fourth-quarter net income up 16 per cent over the same period a year ago.
The Detroit automaker made US$1.99 billion from October through December, or an adjusted US$2.12 per share, easily beating Wall Street per-share projections for US$1.69, according to a poll of industry analysts by FactSet.
Quarterly revenue rose 28 per cent to US$43.1 billion, the company said, also beating estimates for US$39.96 billion.
Shares of General Motors Co. jumped more than 9 per cent at the opening bell Tuesday.
GM made record pretax income of US$14.47 billion, the high end of its guidance of US$13.5 billion to US$14.5 billion. About 42,000 hourly auto workers will get profit-sharing checks of roughly US$12,750, up from US$10,250 in 2021. The profit sharing will cost GM about US$500 million.
The company also announced that it will invest US$650 million in Lithium Americas to jointly develop the Thacker Pass lithium mine in Nevada. Lithium is a key element in electric vehicle batteries, and GM says Thacker Pass is the largest known source of lithium in the US and the third largest in the world. GM has plans to produce 1 million EVs per year by 2025.
GM’s chief financial officer, Paul Jacobson told reporters Tuesday that the company has no plans to cut electric vehicle prices in response to recent price cuts by Tesla and Ford.
“We feel we’re well positioned,” he said. “We’re going to continue to watch that, but our customers are saying that our vehicles are priced well based on the demand that we’re seeing.”
GM’s performance came against the backdrop of a slowing economy due to interest rate increases from the Federal Reserve. The Fed’s key rate, which affects many consumer and business loans, is now in a range of 4.25 per cent to 4.5 per cent, up from near zero last March.
GM, like other automakers, had trouble keeping its factories running at full output during 2022 due to shortages of computer chips and other parts, but the industry and the company started showing signs of recovery late in the year.
GM sold 2.27 million vehicles for the year in the US, up 2.5 per cent over 2021. But fourth-quarter sales rose 41 per cent to more than 623,000. By the end of the year the supply of vehicles on dealer lots had improved 14 per cent to almost 411,000.
Experts don’t expect a return to normal vehicle supplies until sometime next year. Jacobson said GM expects to continue to get strong prices for its vehicles, but it also sees an increase in discounts and other incentives during the year.
For the full year, GM posted net earnings to shareholders of US$9.93 billion, down about 1% from 2021. That beat analysts’ estimates of US$9.95 billion.
GM said it expects full year net income this year in a range of US$8.7 billion to US$10.1 billion. The forecast for adjusted pretax income is US$10.5 billion to US$12.5 billion. The pretax guidance is below figures for 2022, but Jacobson said the company still has a bullish outlook for this year.
Although it’s aware of recession forecasts, Jacobson said GM still sees strong demand for its vehicles, especially newer models. GM, he said, plans to make about US$2 billion in cost reductions during the next two years, in part by filling only strategically important jobs that are vacated due to attrition.
Guidance for this year is lower than last because earnings from GM’s financial unit are expected to be down as used car prices drop, interest rates go up and leasing declines, he said. Plus, the company will see about $1 billion less in pension income this year for accounting purposes, he said.
“Were going to continue to watch it,” Jacobson said. “We want to make sure that we’re cautious and prepared for going forwad as well, but we’ve got lots of new products coming during the year and the year’s gotten off to a good start on pricing.”
GM’s average US vehicle sales price in the fourth quarter was US$52,833 due largely to a higher mix of expensive trucks and SUVs. That’s down about US$1,000 from the same period in 2021, according to Edmunds.com.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and General Motors wasn’t on the list.
While General Motors currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
