General Motors (GM) reported a strong revenue and profit beat on Tuesday morning, and upped its profit forecast for the second time this year as the Detroit-based automaker is still seeing strong demand for its vehicles, and spending less to boot.
For the quarter, GM reported top-line revenue of $44.7 billion, beating street estimates of $42.82 billion. GM’s Q2 revenue rose 25% jump from a year ago and 11.8% sequentially. GM’s adjusted earnings per share (EPS) came in at $1.91, versus the $1.65 the street was expecting.
Of note, GM hiked its profit guidance for the 2nd time this year, with the company now seeing full-year adjusted EBIT earnings at $12.0 billion-$14.0 billion compared to prior guidance of $11.0 billion-$13.0 billion. GM also sees full-year adjusted EPS in a range of $7.15 – $8.15, up from prior projections of $6.35-$7.35.
“The biggest driving force behind our financial results is customer demand for our vehicles, which have now led the U.S. industry in initial quality for two consecutive years,” GM CEO Mary Barra company said in her shareholder letter.
“Our products and response by customers has been stronger than a lot of people would have predicted,” GM CFO Paul Jacobson added in a briefing with reporters.
From a profit perspective, for GM reported $3.2 billion in EBIT-adjusted earnings in Q2, which also includes the impact of a $792 million charge stemming from agreements with battery suppliers LG Electronics and LG Energy Solution due to the Chevrolet Bolt EV recalls from last year. GM said it would end Bolt EV and EUV production at the end of the year.
Earlier this month GM reported that Q2 US deliveries rose 18.8% to 691,978, its best result since Q4 of 2020. Higher volume didn’t impact GM’s pricing power however, as Jacobson revealed that GM’s average transaction prices (ATP) rose roughly $1,600 in Q2.
As for its EV game plan, GM reiterated its plans to produce 400,000 EVs through the first half of 2024 and 1 million by the end of 2025. GM said it built 50,000 EVs in North America in the first half of 2023, and is set to double that in the second half. “[Battery] cell production is on on-target,” Jacobson said, adding that the company was targeting 100,000 EVs produced in the 2nd half of the year.
Notable GM EVs coming in the back half of this year include the Silverado EV, Blazer EV, and Equinox EV.
With Tesla’s price cuts front and center in the EV landscape, GM has said it will not engage in any EV price cuts, as the automaker sees its pricing strategy as appropriate.
Another headwind for GM, as well as its fellow big 3 rivals Ford and Stellantis, are the current UAW labor negotiations. The current UAW contract is set to expire on September 14th, and the impact on the automakers’ financial performance could be severe. GM CEO Mary Barra said in her letter the company’s updated guidance assumes that the automaker “successfully negotiate[s] new labor agreements without a work stoppage.”
When pressed for details on what effect a work stoppage would financially entail, GM’s Jacobson said he wouldn’t get into “any speculation on the impact of a work stoppage.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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