General Motors (GM) shares are up 8.34% as of the close today after the company reported a huge jump in earnings for the fourth quarter and the full year.
For the quarter the car company reported adjusted earnings per share of $2.12 versus an expected $1.69, and revenue of $43.1 billion versus an expected $40 billion. Revenue grew by 28% year over year. For the full year, GM reported EBIT profit of $14.5 billion, near the high end of its forecast of $13 billion to $15 billion.
“GM led the U.S. industry in total sales and delivered the largest year-over-year increase in market share of any OEM, thanks to strong demand for our products and improved supply chain conditions,” CEO Mary Barra said in her shareholder letter.
The good news didn’t stop with the current quarter either. The company seems to have put a shortage of semiconductors and other components behind it. Those supply-chain problems have bogged down factory schedules for more than two years. GM’s vehicle output in North America jumped 37% in the fourth quarter from a year earlier, according to research firm Wards Intelligence.
For 2023, GM said it expects pretax profit to total between $10.5 billion and $12.5 billion, or $6 to $7 a share, above the average analysts’ forecast of $5.78 a share, according to FactSet.
In an effort to secure future raw materials for electric vehicle batteries, GM said it is making a $650 million equity investment in Lithium Americas (LAC). That company is developing a lithium mine, Thacker Pass, in Nevada that is scheduled to go into production in 2026.
The company also indicated that it believes its relatively low-priced electric vehicles won’t need the price cuts recently announced by Tesla (TSLA) and Ford (F) to sustain demand. GM plans to launch several new EV models this year, including the Chevrolet Blazer, which is a similar size as the Tesla Model Y and Ford Mach-E, and priced below both, starting around $36,000.
The average price paid for a GM vehicle in the fourth quarter was $51,770, down about $2,000 from a year earlier but still high by historical standards, the company said.
General Motors is a member of my Jubak Picks Portfolio. That stock is up 9.11% since I initiated that position on October 4, 2022.
