GM reports 52% surge in Q2 net income, raises 2023 guidance a second time

GM now expects to generate adjusted EBIT of between $12 billion and $14 billion this year, up $1 billion from its most recent forecast in April. It raised its 2023 net income forecast to a range of $9.3 billion to $10.7 billion, up from a previous range of $8.4 billion to $9.9 billion. And it upped its automotive free cash flow forecast by $1.5 billion to a range of $7 billion to $9 billion.

“We’re building momentum thanks to incredible customer response to our new trucks and SUVs, and strong execution of our business plan by the GM team, our dealers and our suppliers,” GM CEO Mary Barra said in a letter to shareholders.

GM’s updated guidance assumes the company will reach a new contract with the UAW later this year without a work stoppage, which could prove difficult given the union’s heated rhetoric. CFO Paul Jacobson, speaking to media, declined to say how a strike this fall might impact the automaker.

Jacobson also said the company’s more aggressive cost-cutting efforts would not include any additional planned staff reductions. About 5,000 salaried employees chose to take a buyout early this year as part of the automaker’s previous $2 billion reduction target.

In North America, GM posted adjusted EBIT of $3.2 billion, up 39 percent over the same period a year ago. Its adjusted margins rose 0.6 of a percentage point to 8.6 percent.

The automaker’s international unit posted an adjusted EBIT of $236 million, up 13 percent from a year ago.

Barra, in the letter, attributed most of GM’s success last quarter to strong vehicle demand — especially in the U.S.

“We have earned four consecutive quarters of higher retail market share in the U.S. versus a year ago with continued strong pricing and incentive discipline, we’re leading in both commercial and total fleet deliveries calendar year to date, and we’re growing profitably in international markets such as Brazil and Korea,” she said.

Barra also noted the company achieved its first-half goal of producing 50,000 electric vehicles and remains on track to produce “roughly 100,000” in the second half of this year.

GM said the $792 million charge it took in the quarter stemmed from “new commercial agreements” made with LG Electronics related to the recall of all Chevrolet Bolts in 2021 because of a fire risk. The automaker had previously said LG would pay about $1.9 billion for the recall.

“The charge reflects the conscious decision GM made during the Chevrolet Bolt EV and Bolt EUV recall to serve customers in ways that go beyond traditional remedies, and GM is taking new steps that will reduce its costs and improve EV margins over time,” the company said in a statement.

Jacobson told journalists that GM has fixed roughly 85,000 Bolts, representing about 80 percent of affected vehicles.

Shares in GM rose 2 percent to close at $39.30 on Monday.