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GM, also known as General Motors, has recently reported its third-quarter results. Despite this news, the company’s stock remained largely unchanged on Tuesday. The report indicated that GM had beaten revenue and profit expectations for the quarter. However, the company also announced that it was withdrawing its 2023 guidance due to the uncertainty caused by labor strikes.
The United Auto Workers (UAW) has been engaged in contract talks with GM, and these negotiations have been challenging. As a result, GM has decided to withdraw its profit guidance, which previously projected earnings of $12 billion to $14 billion in EBIT and net income of $9.3 billion to $10.7 billion.
In terms of financial performance, GM reported a 5.4% increase in top-line revenue, reaching $44.13 billion for the third quarter. The company also surpassed expectations with adjusted earnings per share (EPS) of $2.28 and a net income of $3.06 billion.
GM’s Chief Financial Officer, Paul Jacobson, stated that the labor strikes have already cost the company approximately $800 million in pre-tax earnings. This includes $200 million in losses during the third quarter due to disrupted vehicle production.
The UAW strike has not only affected GM plants but also parts and distribution centers. This has severely impacted the company’s ability to service customer vehicles and supply parts to other assembly plants. In fact, the UAW recently expanded its labor walkouts to include GM rival Stellantis, causing further disruption.
Earlier in the month, GM had already anticipated a $200 million hit to its third-quarter profits as a result of the ongoing strike. Analysts estimate that GM is losing around $21 million per day due to plant and distribution center closures.
In addition to the labor strikes, GM is also adjusting its electric vehicle (EV) investments. The company recently announced a delay in its EV truck expansion and the conversion of an EV truck plant to late 2025. This decision is based on the need to manage capital investment and align with evolving EV demand.
GM CEO Mary Barra emphasized the importance of protecting pricing, adjusting to slower near-term growth in EV demand, and implementing efficiency improvements to make their vehicles more cost-effective and profitable.
Overall, GM’s withdrawal of its 2023 guidance reflects the significant impact of the ongoing labor strikes on the company’s financial outlook. The uncertainty surrounding the strikes, coupled with the need to adapt to changing market conditions, has led GM to adjust its projections and moderate its EV investments.