GM's MARY B "LET THEM EAT CASH"

DETROIT Jan 30 2024 Joe White reporting for Reuters wrote that GM shares rose 8.7% in early Tuesday trading, responding to Mary Barra move to return cash to shareholders, including $12 billion in 2023 through a $10 billion share buyback and a 33% dividend increase.

"We are prioritizing returning cash to our shareholders," Barra said. GM's 2024 forecast calls for $8 billion to $10 billion in free cash flow, nearly all of it generated by GM's internal combustion engine, or ICE, vehicles.

However, Barra said GM will launch plug-in hybrid vehicles in North America, a turn away from a strategy of bypassing hybrid powertrains in that market. U.S. hybrid sales have been rising as consumers balk at high EV prices and recharging infrastructure challenges.

"We know the EV market is not going to grow linearly," CFO Paul Jacobson told analysts. "We are prepared to flex between ICE and EV production.

CRUISE UNIT, CHINA POSE CHALLENGES - Analysts questioned Barra about potential shifts in GM's money-losing EV and self-driving vehicle strategies, as well as declining sales in China."We're not going to shy away from making tough calls" to protect profitability, Barra said. "Nothing is off the table."

GM also wants more time to resolve software development problems that have forced the company to stop selling its new Chevrolet Blazer EV.

The 2024 forecast translates to between $8.50 and $9.50 a share, compared to $7.68 in 2023. Fewer shares due to buybacks adds $1.45 a share to the forecast.

That will be offset by higher taxes and interest payments.

Cost-cutting will play a big role in hitting forecasts, as GM expects vehicle prices to drop. GM plans to cut $400 million from marketing spending, on top of $500 million cut last year, Jacobson said. Engineers have cut $200 million from product development costs, Barra said.

For the fourth quarter, GM reported net income rose 5.2% to $2.1 billion on revenues of $43 billion. Adjusted pre-tax profit fell by 54% to $1.8 billion. The decrease reflected the impact of last fall's United Auto Workers' strikes, higher costs at Cruise and a $1.1 billion writedown related to EV battery cells held in inventory, the company said.

Spending at the troubled Cruise robo-taxi unit will be cut by $1 billion. Cruise halted operations after one of its self-driving cars dragged a woman down a San Francisco street.

Separately, GM faces deepening challenges in China, once its largest market. Domestic automakers and Tesla are gaining share with electrified vehicles, fresh infotainment technology and aggressive price cutting. GM expects to post a China loss for the current quarter, Jacobson said.

Reporting by Joe White; Editing by Stephen Coates, Christina Fincher, David Ljunggren and Nick Zieminski