GM Targets 2024 with Major Investor-Focused Initiatives
General Motors, the Detroit automaker, is focusing on regaining the confidence of investors ahead of 2024 after a turbulent year that included labor strikes and challenges in the company’s electric and autonomous vehicle plans.
Increasing Quarterly Dividend and Share Repurchase
On Wednesday, GM announced several major initiatives to achieve this goal; they include increasing its quarterly dividend next year by 33% to 12 cents per share and initiating an accelerated $10 billion share repurchase.
GM’s 2023 Guidance and Stock Performance
Additionally, the company stated it is reinstating its 2023 guidance, which includes an estimated $1.1 billion earning before interest and tax impact from around six weeks of labor strikes by the United Auto Workers union.
CEO Mary Barra shared that the company is finalizing the budget for next year to fully offset the incremental costs of new labor agreements. As a result of these announcements, GM’s stock jumped roughly 8% during premarket trading on Wednesday.
Reinstated 2023 Guidance
GM’s reinstated 2023 guidance paints a positive outlook for the company, including net income and EPS. The stock buyback component includes plans for an accelerated stock buyback to address the volatility caused by the UAW negotiations and labor strikes.
UAW Impact
Before the UAW strikes, CFO Paul Jacobson had stated the company was on track to achieve “toward the upper half” of its earnings forecast. The new labor deals are expected to increase costs and add approximately $575 in costs per vehicle.
Plans for Electric Vehicle and Autonomous Vehicle Subsidiary
GM is also focusing on its electric vehicle plans, with the long-term goal of reducing capital intensity, developing products more efficiently, and reducing fixed and variable costs. Additionally, the company is addressing challenges at its majority-owned autonomous vehicle subsidiary Cruise, focusing on rebuilding trust and safety.
Accelerated Stock Buyback and Future Plans
The accelerated stock buyback includes an aggregate of $10 billion, and the company plans to retire $6.8 billion worth of its common stock immediately. Outside of the announced program, GM said it will have $1.4 billion of capacity remaining under its share repurchase authorization.
GM concluded its announcement by expressing confidence in its future plans and the excitement for what lies ahead. CEO Mary Barra remains optimistic about the company’s prospects and looks forward to sharing the progress with shareholders.
The company is confident that these strategies will keep margins and free cash flow strong, positioning GM well as it heads into 2024. With these investor-focused initiatives and reinstated guidance, General Motors is determined to win back Wall Street’s confidence and steer the company to success in the coming years.
