By David Shepardson
(Reuters) – General Motors said on Wednesday it will buy back $10 billion in shares and boost its dividend by 33%, even as it cuts spending at its troubled robotaxi unit Cruise and lowered profit expectations following the lengthy auto workers’ strike.
The company’s new guidance reduced expected net income attributable to stockholders for 2023 to a range of $9.1 billion to $9.7 billion, compared to the previous outlook of $9.3 billion to $10.7 billion.
That includes an estimated $1.1 billion EBIT-adjusted impact from the United Auto Workers union strike, which lasted just over six weeks, primarily from lost production.
“We will return significant capital to shareholders,” GM CEO Mary Barra said in a statement setting out the largest U.S. automaker’s updated targets for the year.
GM said earlier this year it would cut fixed costs by $2 billion by the end of 2024 and then followed up in July with plans for another $1 billion in costs. In April, GM said about 5,000 salaried workers had taken buyouts and agreed to leave the company.
GM said it would cut costs at Cruise, which has suspended all U.S. testing after a crash in California last month prompted that state’s regulators to bar the company from testing driverless vehicles.
“We expect the pace of Cruise’s expansion to be more deliberate when operations resume, resulting in substantially lower spending in 2024 than in 2023,” Barra said in a shareholder letter on Wednesday.
Cruise has lost more than $8 billion since 2017, including $728 million in the third quarter of this year.
GM now faces higher costs under a new contract with the UAW. The company said it was finalizing its budget for next year “that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing.”
GM’s accelerated share repurchase program will advance $10 billion to executing banks, and the company will immediately receive and retire $6.8 billion worth of GM common stock.
“Our cash balance, which is well above our target, is a function of our recent record profits and our prudent management of resources through the pandemic, supply chain disruptions and labor negotiations,” Barra said.
GM had approximately 1.37 billion shares of common stock outstanding prior to the buyback program, the company said. The program is expected to end in late 2024 and will be executed by Bank of America, Goldman Sachs, Barclays and Citibank.
GM will still have another $1.4 billion of capacity remaining under its share repurchase authorization for additional stock buybacks.
It also expects to increase its common stock dividend by 3 cents per quarter to 12 cents a share beginning in 2024.
(Reporting by David Shepardson; Editing by Sharon Singleton)
