GM beats third-quarter earnings and raises profit forecast for the third time this year

General Motors (GM) gave investors reason to cheer early Tuesday morning after the automaker raised its forecast for the third time this year and significantly beat third-quarter sales and profit expectations.

For the quarter, GM reported revenue of $48.78 billion, comfortably beating Bloomberg consensus estimates of $44.69 billion and higher than the previous quarter’s nearly $48 billion. GM’s third-quarter sales were also 10.5% higher than a year ago.

The company reported adjusted earnings per share (EPS) of $2.96, easily beating expectations of $2.44. The company reported EBIT-adjusted earnings of $4.115 billion, up 15.5% year-over-year, with EBIT-adjusted margin increasing to 8.4% year-over-year from 8.1%.

As for guidance, GM has revised its full-year 2024 guidance upward as follows:

• Adjusted EBIT: $14.0 billion to $15.0 billion ($13.0 billion – $15.0 billion previously)

• Automotive operating cash flow: $22.0 billion to $24.0 billion ($19.2 billion – $22.2 billion previously)

• Adjusted automotive free cash flow: $12.5 billion to $13.5 billion ($9.5 billion – $11.5 billion previously)

• EPS diluted-adjusted: $10.00 – $10.50 ($9.50 – $10.50 before)

“I am proud that GM is delivering our best vehicles ever with strong financial results. But I want to be clear that we do not confuse progress with victory,” GM CEO Mary Barra wrote in her letter to shareholders. “Competition is fierce and the regulatory environment is getting tougher. That’s why we’re focusing on optimizing our ICE margins and working on making our electric vehicles profitable on an EBIT basis as quickly as possible.”

GM Chief Financial Officer Paul Jacobson added in a media call with reporters that while the 19% reduction in GM’s share count through buybacks provided a “tailwind” for the EPS increase, the profit increase was more attributable to the profitability of the company’s core business .

IN Q3, GM delivered 659,601 vehicles, down 2% from a year ago; However, retail sales rose 3%. GM said it delivered more vehicles in the quarter than any other automaker in the United States.

Unsurprisingly, GM’s pickup truck and full-size SUV sales led the way, but electric vehicle sales were also a highlight. While sales of the Bolt EV fell, GM’s other EV models caught up with a total of 32,195 EVs sold, up 60% year over year.

Jacobson said at GM’s investor day in early October that the company is still targeting EV profitability on a positive variable margin basis, even though it cut its EV production volume for the year from 200,000 to 250,000. The company expects to reduce the cost of electric vehicles by $2 billion to $4 billion by 2025.

The story continues

In the media conference, Jacobson explained why variable profit is so important. “Variable profit is a really important step on the path to profitability. It means you’ve reached a tipping point,” he said, where expanding sales are starting to eat into high fixed costs. “The bigger we get, the smaller our EBIT losses will be,” he added.

During its investor day, GM noted that the highest EV losses in 2024 “will help [in] We expect EV EBIT to improve significantly in the coming years.”

Looking forward, Barra said GM expects adjusted EBIT in 2025 to be in a similar range to full-year 2024 results, the company said during its investor day.

This story is developing.

Pras Subramanian is a reporter for Yahoo Finance. You can keep following him X and further Instagram.

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