GM outpaces expectations, raises FCF outlook
2min read General Motors (GM) exceeded expectations in its Q3 2024 earnings report, posting adjusted EPS of $2.96, well above the estimate of $2.43, and revenue of $48.8 billion, beating the consensus of $44.6 billion. This represents a 10% year-over-year growth in revenue, driven by strong performance in both its automotive and financial segments. The company also raised its full-year pre-tax profit forecast to a range of $14 billion to $15 billion, up from the previous $13 billion to $15 billion. GM shares responded positively, gaining over 3% in premarket trading.
GM’s profitability continued to improve, with an adjusted EBIT of $4.12 billion, significantly beating the $3.38 billion consensus. North American operations were a key driver of profitability, with adjusted EBIT in the region rising 13% year-over-year to $3.98 billion. Automotive net cash flow reached $5.83 billion, a 19% year-over-year increase, further demonstrating the company’s strong cash generation capabilities. GM also reaffirmed that it is on track to achieve a net $2 billion reduction in fixed costs, a target it expects to hit by the end of 2024.
The company raised several key financial targets for the full year. GM now expects adjusted EPS to land between $10.00 and $10.50, up from the previous range of $9.50 to $10.50. Additionally, adjusted automotive free cash flow is now projected at $12.5 billion to $13.5 billion, up from prior estimates of $9.5 billion to $11.5 billion. Automotive operating cash flow guidance was also lifted to $22 billion to $24 billion. These upgrades reflect GM’s continued confidence in its ability to generate strong cash flows and maintain profitability amid a challenging macroeconomic environment.
In terms of electric vehicle (EV) production, GM reiterated its commitment to reaching its 2024 EV production and profitability targets. The company remains on track to wholesale approximately 200,000 GM-branded EVs in North America this year. GM believes that EV losses peaked this year and expects a significant profitability tailwind of $2 billion to $4 billion in 2025 as EV sales ramp up. The company also highlighted its competitive advantage in battery manufacturing and flexible assembly capacity, which it believes sets it apart from competitors in the EV space.
Cruise, GM’s self-driving taxi unit, recorded a smaller-than-expected operating loss of $400 million in Q3, down from a $700 million loss in the same period last year. Revenue for Cruise reached $26 million, slightly ahead of estimates. While the division remains unprofitable, the narrower loss reflects improvements in operational efficiency and scaling of its autonomous driving technology. GM remains committed to investing in the growth of Cruise as a key part of its future mobility strategy.
International operations were a weak spot in the quarter, with adjusted EBIT falling 88% year-over-year to $42 million. China, in particular, continues to face challenges from excess capacity and fierce competition, although sales improved slightly from the second quarter. GM’s management remains optimistic about improving performance in China but acknowledges that the region will require more restructuring work to compete effectively.
Overall, GM’s strong Q3 performance and raised guidance underscore the company’s ability to navigate a complex automotive landscape while delivering solid profitability and cash flow. With its ongoing investments in EVs, disciplined cost management, and robust North American performance, GM is well-positioned to continue driving shareholder value into 2024 and beyond.
