General Motors (GM) is poised to release its second-quarter earnings report on Tuesday, with analysts predicting solid results driven by favorable trends in the automotive industry. Refinitiv consensus estimates suggest that GM will report adjusted earnings per share of $1.85 and revenue of $42.64 billion, reflecting significant year-over-year increases of approximately 62% and 19% respectively. The expected positive performance can be attributed to the high prices of new vehicles and increased sales and production within the industry.
Some Wall Street analysts even speculate that GM may raise its guidance for the year, citing stronger-than-expected sales and vehicle pricing in the second quarter. However, the company may remain cautious due to potential challenges that lie ahead in the second half of the year. These challenges include the softening of prices and upcoming contract negotiations with the United Auto Workers (UAW) union.
GM had previously provided its 2023 forecasts, anticipating adjusted earnings between $11 billion and $13 billion, or $6.35 to $7.35 per share, and adjusted automotive free cash flow between $5.5 billion and $7.5 billion. Net income is expected to be in the range of $8.4 billion to $9.9 billion. In its first-quarter results announced in April, GM increased its adjusted earnings guidance and free cash flow. However, it lowered its forecasted net income due to $875 million in special charges related to an employee buyout program.
Despite the challenges faced by the industry, GM’s stock has performed well this year, with an approximate 16% increase. On Monday, the shares closed at $39.30 per share, slightly below the 52-week high of $43.63 per share achieved in February.
Focus on Electric Vehicles and Contract Negotiations
Apart from the financial figures, investors are eagerly awaiting updates on GM’s plans for new electric vehicles for the remainder of the year. The company is expected to introduce all-electric versions of popular models such as the Chevrolet Blazer and Equinox crossovers, as well as the Silverado pickup truck. Additionally, GM will unveil an all-electric version of its flagship Cadillac Escalade SUV. These additions to GM’s electric vehicle lineup demonstrate the company’s commitment to sustainable mobility.
Furthermore, GM may provide additional insights into the challenging contract negotiations with the UAW. These negotiations are anticipated to be particularly contentious, given the combination of the recent national labor movement, new union leadership, and record-breaking company profits. The talks officially began earlier this month between the UAW and GM, Ford Motor, and Stellantis.
Analyst Dan Levy from Barclays highlighted the significance of the UAW negotiations, stating that they are a critical focal point for both Ford and GM in the second half of the year. The previous round of bargaining in 2019 resulted in a breakdown of negotiations between GM and the UAW, leading to a national 40-day strike that cost the company approximately $3.6 billion. The current contracts are set to expire on September 14 and cover approximately 150,000 UAW members employed by the automakers.
General Motors is expected to announce strong second-quarter earnings, benefiting from favorable industry trends. However, the company faces challenges in the second half of the year, including pricing fluctuations and labor negotiations. Additionally, GM’s focus on expanding its electric vehicle offerings reflects its commitment to sustainable transportation solutions. The outcome of the UAW negotiations will play a crucial role in shaping the future of the company and the industry as a whole.