General Motors Company (NYSE:GM) shares are trading lower on Wednesday after the company concluded that a material impairment of its equity interest in SAIC General Motors Corporation Limited (SGM) is necessary.
This decision follows a determination that the value of GM’s investments in certain of its China joint ventures has declined.
The company is evaluating the impact of SGM's planned restructuring actions and recent efforts to stabilize market share and focus on profitability.
General Motors expects to recognize additional equity losses of approximately $2.7 billion resulting from implementation of SGM’s restructuring plan.
The company expects to record an other than temporary impairment of equity interest in the China JV’s in the range of $2.6 billion – $2.9 billion in three months ending December 31, 2024.
The company said that these charges will be recorded in the quarter ending December 31, 2024, and will be non-cash in nature, treated as special for EBIT-adjusted purposes.
The company stated that the conclusion comes after the finalization of a new business forecast and ongoing restructuring actions at SGM to address market challenges and competitive conditions.
This week, the company said that it will sell its stake in Ultium Cells LLC’s battery cell plant in Lansing, Michigan to its joint venture partner LG Energy Solution.
Investors can gain exposure to the stock via First Trust Nasdaq Transportation ETF (NASDAQ:FTXR) and Invesco S&P 500 Pure Value ETF (NYSE:RPV).
Price Action: GM shares are down 1.07% at $53.09 at the last check Wednesday.
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