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• New adjusted earnings guidance for the current year is about $14 billion
• Shares of the company were up more than 3% to about $59.75
General Motors announced on Wednesday to raise its 2021 earnings guidance due to strong demand and better supply of semiconductor chips.
New adjusted earnings guidance for the current year is about $14 billion, an increase from $11.5 billion and $13.5 billion, said CFO Paul Jacobson.
“I’m pleased to say that we’ve experienced a little bit of favorability on costs and volumes have been trending higher than we expected them to be primarily on chip availability,” he said.
Shares of the company were up more than 3% to about $59.75 on Wednesday afternoon.
Jacobson also said that GM is monitoring the impacts of new Covid variant omicron very closely, but it has had no impact on the year’s forecast.
Complications at the company
Investors were disappointed when the company said its full-year results would be at the “high end” of its previous guidance while announcing the third-quarter results in October.
The initial adjusted earnings guidance for the year was between $10 billion and $11 billion due to the semiconductor chip shortage.
Several automakers had to shut plants for weeks due to the global chip shortage in the coronavirus pandemic.
Jacobson said he expects 2022 to be “another strong year” for GM but did not disclose its earnings expectations.
Jacobson added that GM does not expect its vehicle inventory levels to improve to any normalized amount until after 2022.
“I think we’re certainly expecting a strong consumer environment to continue into 2022,” he said.
“I don’t certainly think that we’re going to be in a position where we’re going to be anywhere near a normalized inventory, whether you’re looking at past or you’re looking at go-forward expectations,”Jacobson concluded.
Picture Credits: GM