General Motors has reported better-than-expected financial results for the year so far, despite facing challenges such as increased labor costs due to union contracts, higher interest rates for car buyers, and ongoing losses in its electric vehicle (EV) business. However, the company remains optimistic about its prospects, particularly in the EV market.
GM anticipates that its North American EV business will become profitable in the second half of the year, marking a significant achievement in the company's EV strategy. While EVs have yet to match the profitability of traditional gasoline-powered vehicles, GM is confident that its EV offerings will become even more lucrative by 2025.
The company reported adjusted net income of $3.0 billion, slightly lower than the previous year but still strong. GM's decision to repurchase $10 billion worth of shares following its labor agreement with the United Auto Workers union has positively impacted its earnings per share, which increased to $2.62, surpassing analysts' expectations.
Despite a 3% decline in vehicle sales to 1.3 million units, GM's revenue rose by 7.6% to $43 billion, exceeding forecasts by $2 billion. The decrease in total vehicle sales was attributed to a strategic shift towards retail sales over lower-margin fleet sales. This move resulted in a higher revenue per vehicle sold.
Furthermore, GM raised its full-year earnings forecast to between $10.1 billion and $11.5 billion, up $300 million from previous guidance. The company also increased its adjusted earnings before interest and taxes guidance by $500 million, demonstrating its confidence in its financial outlook.
Following the positive financial results and improved guidance, GM's shares surged by 4% in premarket trading, reflecting investor confidence in the company's performance and future prospects.
