Weighed down by its tariff burden and its struggling EV unit, General Motors’ (NYSE:GM) profit took a hit during the third quarter. But thanks to a combination of upbeat profit guidance and the automaker’s tariff outlook for the coming year, shares rallied more than 10% in Tuesday’s premarket trading.
“GM delivered another very good quarter of earnings and free cash flow. In the U.S., we achieved our highest third-quarter market share since 2017 with strong margins, and our restructured China business was profitable once again. Based on our performance, we are raising our full-year guidance, underscoring our confidence in the company’s trajectory,” GM CEO Mary Barra said in a letter to shareholders.
For FY25, GM (NYSE:GM) now expects to earn an adjusted profit of $9.75 to $10.50 per share, up from earlier guidance of $8.25 to $10 per share, with the midpoint of $10.13 comfortably above the consensus estimate of $9.45. The company also raised its adjusted EBIT guidance to $12.0B to $13.0B and adjusted automative cash flow to a range of $10B – $11B from $7.5B-$10.B, previously.
Tariffs are expected to cost the company $4.5B which is $500M less than previously anticipated, with at least $1.2B to be offset by moving some truck production into the U.S.
Pertaining to EV production, Barra said with near-term EV adoption “lower than planned,” the company is reassessing its EV capacity and manufacturing footprint. But despite efforts to right-size EV production to match consumer demand, GM (NYSE:GM) expects future charges to the segment.
“By acting swiftly and decisively to address overcapacity, we expect to reduce EV losses in 2026 and beyond,” Barra added.
For the reported quarter, General Motors (GM) earned a profit of $2.80 per share, down from $2.96 a year ago, but $0.48 better than expected. Other profitability measures were down as well with adjusted EBIT declining by 18% and adjusted EBIT margin compressed by 150 basis points to 6.9%.
Sales were basically flat for the quarter at $48.59B, beating the consensus estimate by $3.3B.