General Motors (GM) -) posted much stronger-than-expected fourth quarter earnings Tuesday, but pulled its full-year profit forecast amid surging costs related to the historic strike action launched last month by the United Autoworkers Union.
Shares in the group were hit hard, however, by a fresh round of strikes at its SUV plant in Irving, Texas, which UAW president Shawn Fain said was arranged in response to the carmaker's profit surge.
"It's time GM workers, and the whole working class, get their fair share," Fain said.
General Motors said adjusted earnings for the three months ending in September came in at $2.28 per share, up 1.3% from the same period last year and well ahead of the Street consensus of $1.88 per share. Group revenues were pegged at $44.13 billion, GM said, a 5.3% increase from last year that also came in ahead of the analysts' consensus forecast of $43.68 billion tally.
Strike costs in the third quarter were pegged at $200 million, General Motors said, but noted that tally has already risen to around $600 million in the quarter quarter to date, and would likely accelerate further, at a pace of $200 million per week, according to GM CFO Paul Jacobson.
As a result, GM said it was pulling its full-year profit forecasts, which called for adjusted earnings in the region of $7.15 and $8.15 per share, or $8.4 billion to $9.9 billion.
GM also scrapped its goal of making 400,000 electrified vehicles between 2022 and mid-2024, a target CEO Mary Barra was committed to as recently as July of this year.
"Since negotiations started this summer, we’ve been available to bargain 24/7 on behalf of our represented team members and our company," Barra said in her quarterly shareholder letter. "They’ve demanded a record contract — and that’s exactly what we’ve offered for weeks now: a historic contract with record wage increases, record job security and world-class healthcare."
"It’s an offer that rewards our team members but does not put our company and their jobs at risk," she added. "Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do."
GM shares were marked 0.72% lower in early afternoon trading Tuesday following the earnings release to change hands at $29.02 each.
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