General Motors (GM) earnings Q1 2022

DETROIT – Amid rising costs and supply chain instability, General Motors reaffirmed its earnings expectations for 2022 despite reporting a lower net profit and margin compared with a year ago.

CEO Mary Barra and CFO Paul Jacobson described the first-quarter results as “solid” and a testament to actions the company has taken in recent years to lower operational costs, while navigating difficult circumstances.

GM reaffirmed its pretax adjusted earnings forecast of between $13 billion and $15 billion for the year, while raising its net income expectations from between $9.4 billion and $10.8 billion to between $9.6 billion and $11.2 billion.

GM also increased its adjusted earnings per share guidance for the year to between $6.50 and $7.50 per share, up from between $6.25 and $7.25 per share. The adjustment is a result of the company increasing its ownership stake in its Cruise autonomous vehicle unit and including the operation’s losses in its consolidated income tax return.

The company’s first-quarter profit margin was 8.2%, down from 9.3% a year earlier.

Here’s how GM did compared with what Wall Street expected:

  • Adjusted EPS: $2.09 vs $1.68, according to Refinitiv consensus estimates
  • Revenue: $35.98 billion vs $37.01 billion, according to Refinitiv consensus estimates

On an unadjusted basis, net income was $2.9 billion for the first quarter compared with $3 billion a year earlier. The automaker reported pretax adjusted earnings of $4 billion for the first quarter, down from $4.4 billion a year earlier.

Shares of GM are down roughly 34% so far in 2022. Its market cap is about $55 billion, down from more than $90 billion at the beginning of the year.

GM is among the first major automakers to report its first-quarter results, offering a gauge of the auto industry’s ongoing production and supply chain problems.

In addition to inflation and other macroeconomic factors, the global automotive industry has been battling supply chain problems caused by the coronavirus pandemic for more than a year — specifically, supplies of crucial semiconductor chips that are used throughout vehicles.

Despite the problems, GM on Tuesday reaffirmed plans to produce 25% to 30% more vehicles this year than last year.

Investors are also eager for any progress or updates on GM’s plans for autonomous and electric vehicles, including a planned $35 billion investment in the technologies through 2025. GM doesn’t typically break out such costs on a quarterly basis, though rival Ford Motor has promised to begin doing so next year.

GM said Tuesday since unveiling a new electric version of its Chevrolet Silverado pickup in January, the automaker has received about 140,000 reservations for the truck. The vehicle is expected to arrive to the market next year.

Barra said GM expects to generate $50 billion from electric vehicles in North America by 2025. Late last year the company announced plans to double its annual revenues and grow profit margins by the end of this decade.

Barra also announced the company will start tying executive compensation to electric vehicle targets.

GM largely exited Europe several years ago and therefore hasn’t experienced any substantial impacts from the war in Ukraine like other automakers have. Still, it has been battling recent factory shutdowns in China due to Covid-19 outbreaks.

Barra said the company is “cautiously optimistic” regarding its production in China, as the government has labeled auto manufacturing essential operations during lockdowns.

Correction: General Motors raised its 2022 net income expectations from between $9.4 billion and $10.8 billion to $9.6 billion and $11.2 billion. An earlier version misstated the adjustment.

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