GM raises 2021 earnings guidance on better pricing and chip sourcing

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general motors Slightly raises its 2021 earnings guidance based on strong pricingAnd Resilient consumer demand and stronger-than-expected supply of semiconductor chips.

Detroit chief financial officer Paul Jacobson said Wednesday that the new adjusted earnings guidance for the Detroit automaker for the year is about $14 billion, up from the guidance already lifted between $11.5 billion and $13.5 billion.

“I’m happy to say that we saw a bit of an edge in terms of costs and volumes going higher than we expected to be primarily over chip availability,” he said during a Credit Suisse investor event.

Jacobson also cited “continuous strength in the consumer” as the tail wind. He said GM is watching “very closely” the effects alternative Covid omicron, But she did not put any effect in her predictions.

General Motors shares rose more than 3% during Wednesday afternoon trading, to about $59.75 per share. The automaker’s market capitalization is around $86 billion.

GM’s new directive is likely to delight investors and Wall Street analysts who were only disappointed with the company Orientation to “high-end” out of its scope when the third-quarter results are announced in October. The automaker’s shares fell By 5.4% on October 27 after third-quarter results, followed by Crosstown competitor Ford Motor His directive was partially lifted on the same day.

GM’s revised preliminary earnings guidance for the year ranged between $10 billion and $11 billion, as it tried to account for the impact of an ongoing shortage of semiconductor chips.

A shortage of parts has depleted auto stocks and caused automakers, including General Motors, to intermittently close plants this year for weeks, if not months. But it also increased profits from benchmark financing and vehicle pricing due to lower inventories.

Jacobson declined to reveal GM’s profit forecast for 2022, but said he expects it to be “another strong year” for the automaker. GM doesn’t expect its vehicle inventory levels to improve to any normal amount until after 2022, according to Jacobson.

“I think we certainly expect a strong consumer environment to continue into 2022,” he said. “I certainly don’t think we’ll be in a position where we’ll be anywhere near a natural stockpile, whether you’re looking at the past or you’re looking at future projections.”


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