General Motors aims to regain the trust of investors by announcing a series of initiatives on Wednesday, following a challenging year involving labor strikes and struggles with its electric and autonomous vehicle plans. The Detroit automaker plans to boost its quarterly dividend by 33% to 12 cents per share, along with launching an accelerated $10 billion share repurchase. The company also reissued its guidance for 2023, which includes an estimated $1.1 billion earning before interest and tax (EBIT) impact caused by U.S. labor strikes.
GM CEO Mary Barra stated that the company’s upcoming budget will offset the additional costs generated by new labor agreements. The company also revealed its reinstated 2023 guidance, anticipating net income, adjusted EBIT, and earnings per share within certain ranges. GM’s guidance was initially pulled following its third-quarter earnings report linked to the volatility caused by labor negotiations and strikes.
In terms of its plans for electric vehicles, GM anticipates a capital spending range for 2023 between $11.0 billion and $11.5 billion. This marks a decrease from the company’s prior guidance, partly due to the delay of some new products and investments, particularly related to EVs. Meanwhile, Barra expressed disappointment in GM’s production of its next-generation EVs this year, known as Ultium vehicles, but anticipates better performance and margins in the future.
The company is also addressing challenges at its majority-owned autonomous vehicle subsidiary, Cruise. Following a series of incidents, Cruise voluntarily recalled 950 of its robotaxis and suspended all vehicle operations on public roads. GM’s priority is to focus on safety, transparency, and accountability to regain trust with regulators, first responders, and operating communities.
Furthermore, GM’s accelerated stock buyback program involves an aggregate of $10 billion to banking partners, including Bank of America, Goldman Sachs, Barclays, and Citibank. The company will immediately receive and retire $6.8 billion worth of its common stock, and additional repurchases will be determined at the end of the program.
These critical updates indicate GM’s determination to enhance its financial performance and renew investor confidence after a challenging period. Stay tuned for more updates on this breaking news.
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