DETROIT, April 23 (Reuters) - General Motors on Tuesday posted quarterly results that topped Wall Street targets and raised its annual forecast, citing stable pricing and demand for its gas-engine vehicles, sending shares up 4.2% in morning trading.
The Michigan automaker upped its adjusted pretax profit projection to $12.5 billion to $14.5 billion, from its previous stated range of $12 billion to $14 billion for the year.
“Our consumer has been remarkably resilient in this period of higher interest rates,” GM Chief Financial Officer Paul Jacobson said.
The automaker reported that net income in the first quarter rose 24.4% over the year-ago period to $3 billion, on a 7.6% rise in revenue to $43 billion.
Adjusted earnings per share of $2.62 beat the average Wall Street target of $2.15, according to LSEG data. Revenue topped the Wall Street target of $41.9 billion in the March quarter.
While the company started 2024 strong, CEO Mary Barra still has two large challenges ahead: turning around GM's shrinking sales in China, and salvaging Cruise, its robotaxi unit.
Cruise halted operations late last year after one of its self-driving cars dragged a woman down a San Francisco street. Company officials shared earlier this year that GM would cut spending on this unit by $1 billion. The robotaxi business lost $2.7 billion last year, not including $500 million in restructuring costs incurred in the fourth quarter as the unit cut staff. GM spent $400 million on Cruise in the first quarter.
Barra said the business is making progress, citing the return of its vehicles to roads in Phoenix, Arizona, earlier this month, with human drivers and no passengers.
GM’s business in China – previously the automaker’s largest market – has also been faltering. Chinese automakers and Tesla have gobbled up market share in the region, aided by deep price cuts and refreshed technology offerings.
GM lost $106 million in China in the quarter, which CFO Jacobson told reporters was less than his team expected, as it worked through inventory.
The carmaker and its crosstown rival Ford Motor are counting on profit from gas-engine trucks to ease investors' concerns as they continue to funnel cash into costly EV development.
GM has not broken out financial results for its EV business, but Jacobson stuck to previous forecasts for turning a profit. He still expects so-called variable profit, which excludes fixed costs, to be positive by the second half of 2024.
Barra told investors in an earnings release: "We also continue to see sequential and year-over-year improvements in profitability as we benefit from scale, material cost and mix improvements."
The company's joint venture with LG Energy Solution, called Ultium Cells, is ramping up production of battery cells at plants in Ohio and Tennessee, Barra said.
Questions about the market for battery-powered vehicles have increased as EV leader Tesla laid off more than 10% of its global staff earlier this month and slashed prices on its models across several markets.
Tesla will release quarterly earnings on Tuesday, and the EV maker is expected to post its first revenue drop and lowest gross margin in nearly four years, according to LSEG data.
GM outlined last year a $10 billion stock buyback on the heels of reaching a costly new labor agreement with the United Auto Workers union. The first tranche of this was completed in the first quarter, the company said.
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