General Motors Co. on Tuesday blew past earnings estimates for the third quarter, but the company withdrew its yearly guidance and saw its factory in Arlington, Texas, shut down by the United Auto Workers strike.
GM’s stock
GM,
wavered between gains and losses following the news, after being more than 1% higher earlier in the session.
GM Chief Financial Officer Paul Jacobson said in a call following the results that the strike has had an impact on earnings before interest and taxation of about $200 million, and he estimated a $600 million EBIT impact in the current quarter due to lost production.
“Moving forward, we estimate that the impact of the UAW strike to be approximately $200 million per week based on the facilities impacted as of yesterday,” Jacobson said.
“We’re not going to speculate on the duration and the extent of the UAW strike and because of this uncertainty, we have chosen to withdraw our 2023 full-year guidance metrics,” he said, but noted that “strong” fundamentals were pushing GM toward the upper half of the previous range before the strike impact.
Shortly after the call concluded, the United Auto Workers called for workers at GM’s Arlington, Texas, factory to join the strike.
Arlington makes some of GM’s most profitable and desirable vehicles, such as the Chevy Tahoe and Suburban and the Cadillac Escalade. The strike, which is nearing its sixth week, now affects at least one major SUV and pickup truck plant at each of the Big Three automakers: GM, Ford Motor Co.
F,
and Stellantis NV
STLA,
See also: UAW strike expands to Stellantis Ram truck factory
GM had net income of $3.064 billion, or $2.20 a share, for the third quarter, after income of $3.305 billion, or $2.25 a share, in the year-earlier period. Adjusted per-share earnings came to $2.28, well ahead of the $1.87 FactSet consensus.
Revenue rose to $44.131 billion from $41.889 billion a year ago, also ahead of the $42.482 billion FactSet consensus. “We were profitable in every region, including China,” Chief Executive Mary Barra said in a letter to shareholders.
Electric-vehicle sales rose by 28% from the second quarter after the company produced 32,000 EVs and made the first deliveries of the Chevrolet Blazer EV. GM expects further volume increases in the fourth quarter.
Barra also addressed the strike, saying that it was “clear coming out of COVID that wages and benefits across the U.S. economy would need to increase because of inflation and other factors.”
Barra called the company’s current offer to auto workers “the most significant that GM has ever proposed to the UAW, and the majority of our workforce will make $40.39 per hour, or roughly $84,000 a year, by the end of this agreement’s term.”
GM shares have underperformed the S&P 500
SPX
in recent months and have lost about 12% so far this year,t compared with an advance of around 10% for the index in the year to date.
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