GM plans $2B in cost cuts after record 2022 earnings

GM said full-year EBIT of $14.5 billion, up 1.3%, was a record for the company. Overall 2022 net income fell 0.8% to his $9.9 billion, while revenue increased 23% to $156.7 billion.

GM’s fourth quarter adjusted earnings in North America increased 69% to $3.7 billion.

GM shares rose 8.3% to close at $39.32 on Tuesday.

“It takes experience, skill and teamwork to adapt to external factors such as rising interest rates, rising commodity prices and supply chain disruptions, and to deliver on our commitments from year to year,” said CEO Mary Barra with analysts. said on the phone.

“GM leads the U.S. industry in total revenue and ties with the record for the largest year-over-year increase in OEM market share. [average transaction prices]”This reflects the strengths of our product portfolio, including clear leadership, superior quality and increased availability in full-size pickup trucks and full-size SUVs.”

Despite reporting record earnings for 2022, automakers will monitor the broader macroeconomic environment and take steps to cut costs as they continue to ramp up the transition to electric vehicles. am.

GM plans to reduce product complexity and reduce corporate expenses, and plans to cut headcount slightly through job cuts, Jacobson said. He declined to say how much the company would cut its workforce.

“I want to be clear, we are not planning any layoffs,” Jacobson said. “We are looking to hire only the most strategically important roles and will use headcount reductions to manage our overall headcount.”

GM expects full-year net income of $8.7 billion to $10.1 billion and adjusted EBIT of $10.5 billion to $12.5 billion.

Jacobson told reporters this year’s earnings will be impacted by expected lower GM Financial earnings as a result of falling used vehicle prices, rising interest rates, a shrinking lease portfolio and impact on pension accounting. He said he would accept it.

“We think the underlying business for 2023 is pretty much in line with what we saw last year, which is a slightly more bullish statement than where the bulk of the market is,” Jacobson said. I think,” he said. “We’ll continue to monitor. But obviously, as we discussed his $2 billion cost program that we announced today, we want to proceed cautiously and be prepared to move forward. ”

Logistical challenges remain

Logistics challenges and supply chain constraints have improved, but some issues remain, Jacobson told analysts. And it reflects rising commodity and logistics costs, he said.

Jacobson said the company ended 2022 with about 50 days of dealer inventory, including vehicles in transit.

Vehicle numbers in dealer lots are “gradually improving, but still about one-third of mid-2019 levels, supporting a favorable supply and demand environment,” he said.

GM is targeting 50 to 60 days of supply by the end of 2023, which would be 20 to 30 days below mid-2019 levels, Jacobson said, assuming logistics challenges continue to ease. said Mr.

Incentives in North America are likely to increase from the historically low levels seen in 2022, he said, but “this headwind is likely to affect many ’23 model year vehicles, especially the complete- It’s the size SUV and truck and the pricing we expect to achieve with the new launch.”

UAW profit sharing

GM said profit-sharing payments to unionized U.S. employees were a record $500 million. Hourly workers represented by his UAW at the company will each receive a bonus of $12,750 based on his $12.99 billion in North American profits for the year, the union said in a statement. Stated.

“Our members are vital to the success of General Motors. UAW members bring their skills, experience and dedication to their jobs every day and they are worthy of the news today,” said UAW’s GM Division Responsibility. CEO Mike Booth said in a statement. .

“We celebrate today, but we know there are challenges ahead. We will continue to fight for fairness and equity for all UAW-GM members.”

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