Mary Barra, Chairman and CEO of General Motors.
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General Motors on Tuesday beat Wall Street expectations for the third-quarter but lowered its guidance for the year due to the United Auto Workers' 40-day strike against the automaker.
The cost of the strike, $1 billion for the quarter and $3.8 billion for the year, was substantially higher than previously estimated and prompted GM to lower its earnings guidance for the year.
It now expects to earn between $4.50 and $4.80 per share, down from its previous forecast of between $6.50 and $7 per share. It also lowered its automotive adjusted free cash flow to a range of zero and $1 billion, down from $4.5 billion and $6 billion.
Here's what GM reported Wednesday compared to Wall Street's expectations, according to Refinitiv consensus estimates:
- Adjusted earnings: $1.72 per share, vs $1.31 expected
- Revenue: $35.47 billion vs. $33.82 billion expected.
The strike shaved 52 cents per share off the automaker's third-quarter earnings. Revaluations of its stake in Lyft and warrants from French automaker PSA Group took another 15 cents per share off its earnings.
The company's shares were up by less than 1% in pre-market trading.
Wall Street analysts estimated the national work stoppage – the longest since 1970 against GM – cost the automaker more than $2 billion in lost production.
The strike ended on Friday with ratification of a new contract for GM's 48,000 union workers. The deal included pay raises, lump-sum bonuses and $11,000 ratification bonuses for most workers, among other benefits.
In August, prior to the strike, GM reconfirmed its full-year guidance for earnings per share of $6.50 to $7.00 per share. The company touts it has beat Wall Street estimates for 17-consecutive quarters.
Shares of GM have almost fully recovered from double-digit declines during the strike. The stock closed Monday at $36.64, down about 6% since before the strike started on Sept. 16.
This is breaking news. Please check back for updates.
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October 29, 2019 at 07:37PM
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GM's third-quarter earnings beat estimates despite $1 billion strike cost - CNBC
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