Updated at 6:54 am EST
General Motors (G.M.) – Get a free report stocks rose Wednesday after the automaker updated its earnings guidance following the United Autoworkers Union strike and revealed plans to increase its quarterly dividend and buy back $10 billion in stock.
General Motors said the six-week UAW strike, which ended late last month, would cut about $1.1 billion from the group’s results but would ultimately improve free cash flows thanks in part to related shutdowns. with the strike at several facilities across the country.
GM said it now sees full-year adjusted earnings in the region of $11.7 billion to $12.7 billion, down from its previous forecast of $12 billion to $14 billion. Diluted earnings, GM said, would likely be between $7.20 and $7.70 per share, compared with its previous range of between $7.15 and $8.15 per share.
The automaker also said it would increase its quarterly dividend by 33%, to 12 cents a share, starting in 2024, while immediately retiring $6.8 billion in GM stock through its new $10 billion buyback. Dollars.
GM’s free cash flow forecast was raised to between $10.5 billion and $11.5 billion, an increase of $2.5 billion from the high end of its pre-strike forecast.
“GM will deliver very strong earnings in 2023 thanks to an exceptional portfolio of vehicles that customers love and our operating discipline,” CEO Mary Barra said in a statement.
“We are finalizing a budget for 2024 that will fully offset the incremental costs of our new labor arrangements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently and further reducing our fixed and variable costs .costs,” he added. “With this clear path forward and our strong balance sheet, we will return significant capital to shareholders.”
General Motors shares rose 6.13% in premarket trading to indicate an opening price of $30.66 each, a move that would leave the stock down about 8.1% in the last six months.
GM has been working to cut costs and improve efficiency since the summer, and accelerated those plans after resolving its dispute with the UAW last month and agreeing to raise wages for salaried workers by about 25% over the next five years. .
Earlier this month, GM said it would not advertise during the 2024 Super Bowl, marking its first absence from the world’s largest annual sporting event since 2019, following what it called an evaluation of media strategies “to ensure that align with our business priorities.
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