Despite significant third-quarter earnings growth, General Motors maintains its full-year forecast despite "headwinds"

DETROIT, MI — GM was significantly above Wall Street's profits estimates in the third quarter, although revenue fell slightly short.

Here's how GM fared in comparison to analyst forecasts collected by Refinitiv:
  • Earnings per share adjusted: $2.25 vs. $1.88
  • Revenue: $41.89 billion as opposed to $42.22 billion
The massive beat and narrow miss on the top line has been a theme for the manufacturer throughout the coronavirus epidemic, as restricted vehicle supply has resulted to lower sales but better profits on in-demand SUVs and pickup trucks.

Despite the bottom-line beat, GM did not change its year-end projection as profit margins shrank. The business anticipates a full-year net income of $9.6 billion to $11.2 billion and adjusted earnings before interest and taxes of $13 billion to $15 billion, or $6.50 to $7.50 per share.

According to GM CFO Paul Jacobson, the firm expects to meet the "middle" of its profits target for the year. He stated that the carmaker is not ignoring external economic issues, but that there has been "no direct influence" on its goods.

"We're going to keep being nimble," he told reporters during a conference call. "We're still seeing high demand."

His remarks resembled those made by General Motors CEO Mary Barra in a letter to shareholders on Tuesday. She stated that the business confirmed its projection "despite a tough climate since the demand for GM goods is high and we are aggressively handling the challenges we encounter."

Following the company's quarterly report, shares of the carmaker were up roughly 4% in premarket trade.

Most investors were anticipated to look over the Detroit automaker's numbers and instead focus on any changes in outlook or remarks about broader economic difficulties. At the outset of earnings season, inflation has already dominated the discourse on Wall Street.

Investors are eagerly watching the auto industry's results and predictions for any signals that consumer demand may be faltering amid increasing interest rates and recession worries.

As of June 30, the carmaker has finished around 75% of the 95,000 vehicles in its inventory that were constructed without certain components, according to Jacobson. GM anticipates "virtually all of these cars" to be finished and sold to dealers by the end of 2022.

GM reported an adjusted net income of $4.3 billion in the third quarter, up from $2.9 billion the previous year. Its adjusted profit margin for the period was 10.2%, down from 10.7% in the third quarter of 2021.

Unadjusted net income was $3.3 billion, up $885 million from the previous year. North America, as it has been, was the company's profits powerhouse, with adjusted earnings of $3.9 billion, up from $2.1 billion a year earlier. Earnings in China climbed by $60 million compared to the third quarter of 2021, but earnings in the company's finance branch fell to $911 million, a $182 million decrease from the previous year.

Jacobson dismissed worries about slowing growth and price in China, the world's largest auto market. Despite being GM's top sales market, he regarded it as an "important market" but not "decisive" to its financial performance.

Since consumers were previously able to readily finance automobiles at low-interest rates and record-high prices, GM Financial's earnings have declined after a period of good performance during the coronavirus epidemic.

GM Financial's profits are projected to fall from their record highs, according to Jacobson, who added that the company still expects the sector to continue to perform strongly.

The team has done a tremendous job of structuring their credit portfolio to weather any storm that we could see, and we still see a lot of positive coming out of GM Financial, he added.

Through September, Cruise, GM's majority-owned business for autonomous vehicles, lost $1.4 billion, including $500 million in the third quarter. Earlier this year, the business began providing paid trips in self-driving cars.

GM said on Tuesday that it will have a webcast for investors on Nov. 17.

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