Despite a decline in its market share in China and the U.S., General Motors’ North American operations, driven by robust truck sales, played a crucial role in the company’s impressive first-quarter performance. A combination of stable vehicle pricing and increased retail sales in the region enabled GM to achieve a noteworthy 10.6% adjusted profit margin in North America, exceeding its earlier projections of 8% to 10%. Overall, GM’s adjusted EBIT for the quarter witnessed a 1.8% increase to $3.87 billion, translating to an adjusted EBIT margin of 9.0%, reflecting a slight decline of 50 basis points.
The company’s net income margin stood at 6.9%, demonstrating a significant improvement compared to 6.0% in the corresponding period last year. GM’s CFO, Paul Jacobson, remarked that vehicle prices remained stable or slightly decreased due to variations in the vehicle mix during the quarter. The company remains committed to its goal of producing between 200,000 and 300,000 EVs in 2024.
As of March 31, 2024, GM held a substantial $25.5 billion in cash and equivalents, with an adjusted automotive free cash flow of $1.09 billion. For fiscal year 2024, GM revised its guidance, projecting adjusted EPS to range between $9.00 and $10.00, surpassing the earlier estimate of $8.50 to $9.50 and analysts’ consensus of $9.08. Additionally, the company anticipates an adjusted automotive free cash flow of $8.5 billion to $10.5 billion, compared to the previous guidance of $8.0 billion to $10.0 billion. Capital spending is expected to remain within the range of $10.5 billion to $11.5 billion.
During the company’s conference call, GM’s CFO expressed optimism about returning to profitability in China during the second quarter. Over the past 12 months, GM’s stock has exhibited a remarkable 26% gain. Investors seeking exposure to the company’s performance can consider investment vehicles such as the First Trust Nasdaq Transportation ETF (FTXR) and the Invesco S&P 500 Pure Value ETF (RPV).
