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Investing.com - General Motors (NYSE:GM) has unveiled a stronger-than-anticipated forecast for its 2025 earnings, fueled by strength in its home US market and steps to bolster its operations in China, although shares in the group slumped after an analyst warned the outlook may not provide much upside.
The carmaker said it expects to report adjusted earnings per share of $11 to $12 for the year, topping Bloomberg consensus estimates for an outlook of $10.60.
Net income attributable to shareholders is seen at $11.2 billion to $12.5 billion, also above expectations of $10.63 billion. GM noted that it would be bolstered by a $500 million estimated benefit from reduced year-on-year expenses at its Cruise autonomous driving unit.
Projected capital spending of $10 billion to $11 billion was also factored into the 2025 guidance.
In a statement, GM CEO Mary Barra added that the group has a "broad and deep" line-up of internal-combustion engine vehicles and electric cars that may help counter lingering uncertainties over trade, tax, and environmental regulations. GM had previously said that it was benefiting from resilient consumer demand for its trucks and sport-utility vehicles despite possible headwinds from relatively elevated interest rates.
However, the firm's stock price dropped sharply after analysts at Bernstein said they were not sure the full-year guidance "leaves no room for errors, and also does not include impact from regulatory changes in the US, especially on tariffs and [battery-electric vehicle] support".
For the 2024 fiscal year, the company posted adjusted earnings before interest and taxes of $14.9 billion, at the top end of its previously-improved outlook of $14 billion to $15 billion.
Full-year sales jumped by 9.1% to $187.4 billion, with Barra highlighting GM's US overall deliveries and a push to "distance ourselves from the [auto] industry's pricing, incentive, and inventory pressures".
Meanwhile, Barra said GM's business in China, the world's largest automotive market, logged "positive equity income for the fourth quarter before restructuring costs". GM, which is planning to overhaul its operations in the country in conjunction with a local joint-venture partner, is "taking steps [...] to improve from there", Barra added.
In the fourth quarter, GM reported adjusted earnings per share of $1.92, ahead of expectations of $1.83. Net sales of $47.70 billion were above projections as well.
GM generated $1.8 billion in adjusted automotive free cash flow in the quarter, up from $1.3 billion a year ago thanks to improved execution and lower capital spending, analysts at Bank of America said in a note to clients.