GM raises 2023 guidance on strong sales, higher profits
General Motors beat first-quarter profit estimates and raised its full-year earnings and cash-flow guidance after vehicle demand at the start of the year surpassed expectations. Its shares rose in premarket trading.
GM made $2.21 a share in adjusted profit in the first quarter, compared to a consensus forecast of $1.72 a share. Revenue rose 11% to $39.99 billion, it said Tuesday, which was more than the $39.24 billion analysts expected.
The stronger results stem from rising sales in the US, even in the face of higher interest rates and inflation. GM executives said demand was strong enough to revise 2023 guidance upward, boosting profit estimates for the year by $500 million to between $11 billion and $13 billion.
“We did it with strong production and inventory discipline and consistent pricing,” GM Chief Financial Officer Paul Jacobson said on a call with journalists. “All in all, we’re feeling confident about 2023.”
The Detroit automaker raised per-share full-year guidance to between $6.35 and $7.35, up from $6 to $7 a share, and said free cash flow would also increase by $500 million to a range of $5.5 billion to $7.5 billion.
GM’s shares pared a gain of as much as 4.4% before the start of regular trading Tuesday, rising 3.5% to $35.50 as of 6:55 a.m. in New York. The stock was up 1.9% for the year as of the close on Monday.
North American Strength
The automaker’s sales were particularly strong in North America, where first-quarter earnings rose before interest and taxes rose to $3.6 billion. Vehicle sales rose 18% to 707,000 in the region.
Jacobson said the company originally expected to sell 15 million vehicles in the US this year, slightly less than the 15.5 million annualized rate automakers foresaw in the first quarter.
North American demand was enough to offset a weak performance in China, GM’s second-largest market. The automaker continues to struggle in the country, where its vehicle sales fell 25% to 462,000 vehicles in the quarter. Profits from its joint ventures in the market slumped 65% to $83 million.
The market has struggled overall in the wake of Covid-19 restrictions and foreign automakers have had to overcome a growing preference for Chinese brands by competing on price, squeezing profit margins.
The situation in China probably won’t significantly improve until the second half of the year, according to Jacobson.
GM remains on target to sell 150,000 electric vehicles this year, the CFO said. About 70,000 of them will be Chevrolet Bolt and Bolt EUV compacts and 80,000 will be larger models built using the company’s new Ultium battery pack. Those include the Cadillac Lyriq, Hummer pickup, Chevy SIlverado pickup and Chevy Blazer and Equinox SUVs.
GM’s Cruise self-driving car unit nearly doubled its loss in the quarter to $561 million.