With auto strike over, GM announces big share buybacks

TEXAS (AFP): General Motors announced hefty new initiatives Wednesday to return billions of dollars to shareholders, lifting its stock price as it estimated the recent labor strike hit at $1.1 billion.

GM also reinstated and adjusted its full-year profit outlook now that its cost picture is resolved following a new contract with the United Auto Workers.

“GM will deliver very strong profits in 2023,” said Chief Executive Mary Barra.

“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs.”

GM withdrew its financial forecast in October in the middle of a weeks-long UAW strike that also affected fellow Detroit “Big Three” automakers Ford and Stellantis.

Workers ratified contracts with a 25 percent wage increase for hourly employees earlier this month.

Under the new outlook, GM now sees net income of between $9.1 billion and $9.7 billion, compared with the prior outlook of $9.3-$10.7 billion.

With the labor situation resolved, GM announced a $10 billion “accelerated” share repurchase program and plans to boost its dividend by 33 percent.

GM previously said it was deferring a conversion of a plant in Michigan to late 2025 instead of next year due to weaker near-term demand for electric vehicles, saving some $1.5 billion in capital in 2024.

Shares of GM jumped 7.1 percent in pre-market trading.