General Motors (GM) has reported a significant financial impact from the recent six-week strike by autoworkers, with pretax earnings suffering a $1.1 billion loss, according to The Associated Press.
Despite this setback, GM remains optimistic, planning to cover the costs of its new contract with the United Auto Workers (UAW) and even increase its dividend.
“GM will deliver very strong profits in 2023 thanks to an exceptional portfolio of vehicles that customers love and our operating discipline,” GM Chair and CEO Mary Barra said in a statement.
“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” she added. “With this clear path forward, and our strong balance sheet, we will return significant capital to shareholders.”
The Detroit-based automaker has revised its full-year earnings forecast to a net income (attributable to stockholders) range of $9.1 billion to $9.7 billion, a slight decrease from its prior estimate. However, GM anticipates an increase in free cash flow, expecting it to reach between $10.5 billion and $11.5 billion.
To achieve these financial goals, GM plans to reduce capital expenditures, including slowing down investments in electric vehicles and its autonomous vehicle unit, Cruise. Cruise recently faced a setback as California regulators revoked its robotaxi license following an incident involving a pedestrian.
The new labor agreement with the UAW, ratified earlier this month, promises significant gains for hourly employees, including wage increases of 25% and the restoration of benefits.
Additionally, GM recently concluded a favorable agreement with Unifor, representing its Canadian hourly workforce. The three-year pact, approved by an overwhelming majority of Unifor members, includes wage increases, plant investments, and improved conditions for temporary workers.
Following these announcements, GM’s shares saw a notable increase of about 10% in early trading on Wednesday, Nov. 29, offering a positive turn after a 14.1% decline in stock value this year, according to CNBC.
