By Associated Press Detroit
PUBLISHED 11:28 AM ET Nov. 29, 2023
Autoworker strike cost GM $1.1B, a cost it says it can absorb as it announces massive stock buyback
General Motors says pretax earnings took a $1.1 billion hit this year due to a six-week strike by autoworkers, but the company expects to absorb increased labor costs and have enough left to buy back stock worth nearly one quarter of the company's $44 billion market value.
The Detroit automaker on Wednesday said it would increase its dividend by one-third in January to 12 cents per share and buy back $10 billion worth of stock, with $6.8 billion being acquired immediately.
Shares of GM rose nearly 11% Wednesday after the stock buyback was announced, but they are still down about 27% in the past year.
What You Need To Know
• General Motors says pretax earnings took a $1.1 billion hit this year from a six-week strike by autoworkers
• But it expects to absorb higher labor costs and buy back stock worth nearly one quarter of the company's $44 billion market value
• GM says Wednesday it will buy $10 billion of its shares within 11 months
• The Detroit automaker also reinstated its full-year earnings forecast that was withdrawn during the United Auto Workers strike that ended Oct. 30. The company now predicts full-year net income of $9.1 billion to $9.7 billion, down from its pre-strike outlook
• GM plans to cut capital spending, including a slowdown in spending on electric vehicles and at Cruise, its troubled autonomous vehicle unit. The dividend will rise 33% to 12 cents per share starting in January
The company also reinstated its full year earnings forecast that was withdrawn after the United Auto Workers began targeting the factories of Detroit automakers with strikes on Sept. 15. Those strikes continued at GM until Oct. 30.
The company now predicts full-year net income of $9.1 billion to $9.7 billion, down from its previous outlook of $9.3 billion to $10.7 billion. But GM expects to generate more cash for the full year. It expects free cash flow of $10.5 billion to $11.5 billion, an increase from a previous forecast of $7 billion to $9 billion.
To get there, GM plans to cut capital spending, including a slowdown in spending on electric vehicles and at Cruise, its troubled autonomous vehicle unit. California regulators revoked the San Francisco-based subsidiary's robotaxi license last month after one of its vehicles dragged a pedestrian to the side of a street after the person was hit by another car.
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