General Motors (GM) faced a $1.1 billion hit in pretax earnings due to a six-week strike by autoworkers, but the company aims to absorb increased labor costs and proceed with a $10 billion stock buyback, representing nearly one-quarter of its $44 billion market value.
Despite a recent 11% surge in shares following the stock buyback announcement, they remain down about 27% in the past year. GM reinstated its full-year earnings forecast, anticipating net income of $9.1 billion to $9.7 billion. To achieve this, the company plans to cut capital spending, including slowing down investment in electric vehicles and its autonomous vehicle unit, Cruise.
The company also expects to raise its dividend by 33% in January. GM faces increased labor costs due to new contracts with the United Auto Workers (UAW) and Canadian autoworkers, totaling $9.3 billion over the next four years and eight months. The contracts will raise top assembly plant worker pay by about 33% by April 2028. GM's CEO, Mary Barra, expressed disappointment in the stock's performance but remains confident in the company's future, focusing on greater efficiency and reduced costs.
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