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GM pulls the steering amid auto strikes

GM stock was largely unchanged Tuesday after the company reported third-quarter results.

Yahoo Finance’s Pras Subramanian reports:

Against the backdrop of painful contract talks with the United Auto Workers (UAW), General Motors (GM) on Tuesday reported third-quarter revenue and earnings, but withdrew its 2023 guidance due to uncertainty over a labor strike.

GM Chief Financial Officer Paul Jacobson said the company withdrew its previously announced earnings guidance of $12 billion to $14 billion in earnings before interest and taxes (EBIT) and net income attributable to shareholders of $9.3 billion. $10.7 billion.

For the third quarter, GM reported total revenue of $44.13 billion (vs. $43.01 billion estimate), an increase of 5.4% from a year ago. On the profitability front, GM reported adjusted EPS of $2.28 per share (versus $1.84 expected), with net income of $3.06 billion.

Jacobson also said the labor strikes, which began in mid-September, cost the automaker nearly $800 million in pre-tax profits due to lost vehicle production, including $200 million during the third quarter.

In addition to hitting GM plants in Wentzville, Missouri, and Lansing, Michigan, the UAW is striking all of GM’s parts and distribution centers, hindering the automaker’s ability to service customer vehicles and provide parts to other assembly plants. Monday morning, UAW It expanded its workers’ strikes at General Motors’ competitor Stellantispulling more than 6,000 workers from Stellantis’ highly profitable Ram truck plant in Sterling Heights, Michigan.

Earlier this month, GM noted this It could take $200 million to third quarter earnings due to the ongoing strike. JPMorgan analyst Ryan Brinkman estimated that GM would likely lose $21 million a day due to the closure of factories and parts distribution centers.

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GM is also adjusting its investments in electric vehicles. Last week, GM said it was delaying its electric vehicle truck expansion, delaying the conversion of its electric vehicle truck plant to late 2025 to “better manage capital investment while aligning with evolving demand for electric vehicles.”

“We are also tempering the acceleration of electric vehicle production in North America to protect our prices, adjust to slower near-term demand growth, and implement engineering efficiencies and other improvements that will make producing our vehicles less expensive, and more profitable.” CEO Mary Barra said in her letter to shareholders.

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