General Motors
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GM Confirms Profit Forecast Despite 'Challenging' Environment

Oct. 25, 2022
On CNBC, CEO Barra said GM was better positioned for a potential recession than in the past because inventories remain lower than historical averages.

General Motors confirmed its full-year financial forecast Tuesday, lifting shares as it reported strong consumer demand in spite of a "challenging" environment with grinding inflation.

The big US automaker scored a 37% jump in third-quarter profits to $3.3 billion, bolstered by strong vehicle pricing in a market with historically low auto inventories.

Revenues jumped 56% to $41.9 billion, a quarterly record.

GM Chief Financial Officer Paul Jacobson acknowledged rising worries about the drag from inflation on economic growth, but said the company was still seeing robust demand for its products.

"We haven't seen any direct impact on our products. Pricing remains strong, demand remains strong for our product," Jacobson said on a conference call with reporters.

"I think we can't ignore what others are saying out there and what others are seeing out there," he said. "So we're going to continue to be agile, with both our cost investments as well as  our production.

"But we continue to see that strong demand so the best we can do is be prepared for it."

GM benefited from increased auto deliveries worldwide, including in North America where it shipped around 75% of the partially-built autos from the prior quarter that had been suspended due to shortages of key materials.

Like other automakers, GM's operations have been constrained by limits on components, especially semiconductors.

The Detroit-based company pointed to "improvements" in the supply chain and semiconductor availability, but said it still faced "commodity and logistic challenges," according to its earnings presentation.

"I wouldn't say we're completely out of it yet," GM Chief Executive Officer Mary Barra said of the semiconductor issue. "It's more volatile than I would expect at this point. But we're continuing to work through the different challenges and quarter by quarter, we're seeing it improve."

In an interview with CNBC, Barra said GM was better positioned for a potential recession than in the past because inventories -- while elevated compared with a few months ago -- remain lower than historical averages.

"We have the ability right now because inventories are so low to really monitor the situation," Barra said, adding that "we're much better prepared to manage if we do move into a recession or have challenges from a demand-side perspective."

The results translated into higher-than-expected profits per share, but revenues slightly lagged analyst expectations.

Shares rose 3.1% to $37.04 in pre-market trading.

Copyright 2022, Agence France-Presse

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