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GM starts buyback, raises dividend and reinstates 2023 guidance

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Mary Barra, Chairman and CEO of General Motors Co. (GM) speaks during the Milken Institute Global Conference in Beverly Hills, California on May 2, 2022.

Patrick T. Fallon | AFP | getty images

General Motors The company is trying to regain Wall Street’s confidence in 2024 with several investor-focused initiatives on Wednesday after a tumultuous year of labor strikes and setbacks in its plans for electric and autonomous vehicles.

The Detroit automaker plans to boost its quarterly dividend by 33% to 12 cents a share next year; Initiate accelerated $10 billion share buybacks; And restated its 2023 guidance to include an estimated $1.1 billion in earnings before interest and taxes, or EBIT-adjusted impact, from nearly six weeks of U.S. labor strikes by the United Auto Workers union.

GM CEO Mary Barra said in a statement that the company is finalizing a budget for next year that “will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing for the business.” This includes reducing the capital intensity of production, developing products.” Even more efficiently, and will further reduce our fixed and variable costs.”

GM’s restated 2023 guidance also includes:

  • Net income attributable to shareholders was $9.1 billion to $9.7 billion, compared with the previous estimate of $9.3 billion to $10.7 billion.
  • Adjusted EBIT of $11.7 billion to $12.7 billion, compared to the previous outlook of $12.0 billion to $14.0 billion.
  • Adjusted earnings per share, including stock buybacks, were about $7.20 to $7.70, compared with the previous outlook of $7.15 to $8.15.
  • EPS is in the $6.52 to $7.02 range, including stock buybacks, compared to the previous outlook of $6.54 to $7.54.
  • Adjusted automotive free cash flow was $10.5 billion to $11.5 billion, compared to the previous outlook of $7.0 billion to $9.0 billion.
  • Net automotive cash provided by operating activities of $19.5 billion to $21.0 billion, compared with $17.4 billion to $20.4 billion in the previous outlook.

GM withdrew its guidance when it reported its third-quarter earnings on October 24, citing instability caused by UAW negotiations and labor strikes. The work stoppage ended on October 30 when both sides reached a temporary agreement.

Before the UAW strikes, CFO Paul Jacobson said the company was on track to achieve “the upper half” of its earnings forecast.

At the time, GM said the UAW strikes caused the automaker to lose approximately $800 million in pretax income due to reduced vehicle production, including $200 million during the third quarter.

GM said Wednesday it now estimates capital spending in 2023 will be between $11.0 billion and $11.5 billion, down from prior guidance of between $11 billion and $12 billion, which reflects previously announced downsizing of some products. The time frame is driven by more capital-efficient investments.

Many of those affected products were electric vehicles. Barra said in a letter to shareholders on Wednesday that he was “disappointed” with production this year of the company’s next-generation EVs, known as Altium vehicles.

He also said the automaker was “addressing challenges” at its majority-owned autonomous vehicle subsidiary Cruise.

This is breaking news. Please check back for updates.

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