GM Implements $10 Billion Buyback, Increases Dividend, and Restores 2023 Guidance Following UAW Strikes

General Motors (GM) is taking steps to regain Wall Street’s confidence and reassure investors with a series of initiatives geared towards growth and profitability. The automaker announced plans to raise its quarterly dividend by 33% to 12 cents per share and initiate a $10 billion share repurchase. These moves reflect GM’s commitment to returning capital to shareholders and increasing shareholder value.

In addition to these financial measures, GM is also reinstating its 2023 guidance. The guidance includes an estimated $1.1 billion impact from recent U.S. labor strikes, which had previously caused the company to withdraw its guidance due to volatility. CEO Mary Barra expressed confidence that GM is finalizing a budget to offset any incremental costs resulting from the new labor agreements.

This positive news has already had an impact on GM’s stock, with an approximately 8% jump during premarket trading following the announcement. The reinstated 2023 guidance encompasses several key projections, including net income, adjusted earnings before interest and taxes (EBIT), adjusted earnings per share (EPS), adjusted automotive free cash flow, and net automotive cash provided by operating activities.

However, GM acknowledges that new labor deals in the U.S. and Canada are expected to increase costs and potentially impact vehicle prices. To offset some of these increased costs, GM plans to reduce capital spending and delay certain new product launches and investments, particularly in the electric vehicle (EV) sector. Barra expressed disappointment in the production of GM’s next-generation EVs but expects improved production and margins in the future.

As part of its efforts to rebuild trust and address challenges, GM is also focusing on its autonomous vehicle subsidiary Cruise. Cruise recently issued a voluntary recall and suspended vehicle operations following incidents and criticism. Barra emphasized that safety, transparency, and accountability are top priorities for the company as it works to rebuild trust with regulators, first responders, and communities.

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Looking ahead, GM aims to achieve low- to mid-single-digit EBIT-adjusted margins on its EV portfolio by 2025. These initiatives and projections demonstrate GM’s commitment to growth, profitability, and sustainability in a rapidly evolving automotive industry. As the company takes steps to address its challenges and navigate the changing landscape, it remains focused on delivering value to its investors and building a successful future.

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