General Motors on Tuesday reported pretax profit gains of $1 billion in the fourth quarter to $3.79 billion. For the full-year, pretax profits rose to $14.5 billion compared with $14.3 billion in 2021.
GM’s overall gains came from improved inventory of pickups and SUVs as parts constrictions eased. GM sold a total of 1.1 million full-size pickups, midsize pickups and full-size SUVs for the year, all of which carry big profit margins.
GM said it incurred a special charge of $511 million in the fourth quarter related to a buyout program for its Buick dealers. It also took a special charge of $657 million for closing its operations in Russia.
GM’s challenge to leaders in 2023
GM CFO Paul Jacobson said the company will start a $2 billion cost-savings program over the next two years, with 30% to 50% of it happening this year. It includes cutting expenses and overhead as a precaution against an economic downturn. But he said, “I want to be clear, we are not doing layoffs.”
GM will achieve much of the savings from attrition. “Our headcount will be down slightly from where we are (today), just by managing attrition so this is a general challenge to all the leaders,” Jacobson said. “When we see attrition, we need to find ways to find more efficiency than just hiring. We’ll still hire, but only in our high priority areas.”
For 2023, GM said it expects its core auto operations to perform at “a consistently strong level,” with full-year net income between $8.7 billion to $10.1 billion and adjusted pretax profits of $10.5 billion-$12.5 billion.
The 4th quarter in a snapshot
GM, which owns the Chevrolet, Buick, GMC and Cadillac brands, reported a gain in global revenue to $43.1 billion compared with $33.6 billion in the year-ago quarter. The results beat Wall Street expectations. Zacks Consensus Estimate expected GM to post revenues of $41.54 billion.
More:GM reports $14.3 billion in 2021 earnings despite COVID-19, chip shortage
GM reported net income rose to $1.9 billion compared with $1.7 billion. GM held its title as the top-selling carmaker in the United States in the fourth quarter with total U.S. sales rising 41.4% year-over-year to 623,261 vehicles. All of GM’s brands reported sales gains except for Buick.
In China, GM’s second most important market, GM and its joint ventures recorded a net revenue decline for the quarter to $10.4 billion compared with $13.6 billion a year-earlier due to the effects of COVID-19-related restrictions there in the first half of the year.
The full year in a snapshot
For the year, GM’s global revenue was $156.7 billion compared with $127 billion for 2021. GM’s annual net income dipped slightly to $9.9 billion compared with $10.02 billion in the year-ago period. GM reported adjusted earnings before interest and taxes of $14.5 billion, up from $14.3 billion. GM’s new vehicle sales in the U.S. rose 3% to 2,274,088 new cars sold compared with 2021.
GM’s lending arm, GM Financial, reported full-year revenue of $12.7 billion, down from $13.4 billion in revenue it recorded last year.
What GM leadership has to say
In a letter to shareholders, CEO Mary Barra said 2023 will be a breakout year for GM’s EV launches.
“By leveraging U.S.-made battery cells produced by our Ultium Cells joint venture and the scalability and flexibility of the Ultium Platform, we are accelerating production of the Cadillac Lyriq, GMC Hummer EV and BrightDrop Zevo 600,” Barra said. “We will launch exciting vehicles like the Chevrolet Silverado EV, Blazer EV and Equinox EV. This keeps us on track to produce 400,000 EVs in North America from 2022 through the first half of next year.”
But do not expect any price adjustments, Jacobson told reporters, even as Ford Motor Co. and Tesla have recently cut prices of their EVs.
“We see an incredibly strong demand for those products with the pricing strategy we’ve gone to market with,” Jacobson said. “We feel we’re well-positioned.”
What analysts have to say …
GM’s strength comes from the U.S., said Michelle Krebs, executive analyst at Cox Automotive. “Due to much improved chip and parts supply, GM closed the year strong,” Krebs said. “GM’s average transaction price of $52,849 slipped slightly from the 2021 fourth quarter but remained high compared to pre-COVID years.”
Morningstar’s David Whiston said GM’s continued share buybacks helped its bottom line. “You would not know there’s recession fears looking at these results and 2023 guidance,” Whiston said. “Pricing will be a key variable and will likely come down, but by how much is the uncertainty.”
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Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.