Key takeaways from GM’s Q4 results and 2022 guidance

DETROIT – General Motors‘ fourth-quarter earnings beat Wall Street’s expectations and its 2022 guidance pleased analysts, after CEO Mary Barra assured analysts the company would earn near-record profits this year even while it spends billions on electric and autonomous vehicles.

“We can and we will keep up our aggressive pace backed by strong results,” Barra said Tuesday during an analyst call. “We expect to follow our record EBIT-adjusted earnings in 2021 with another year of record or near-record results in 2022, while investing significantly more year-over-year to accelerate our growth.”

Barra, among other things, announced GM is pulling ahead “significant investment” from the second half of the decade into a $35 billion investment plan in electric and autonomous vehicles through 2035. She said the company is targeting to sell 400,000 EVs in North American through 2023.

The plans were well-received by Wall Street analysts but did little for GM’s stock. Shares fell by about 3% during trading midday Wednesday. Evercore analyst Chris McNally described GM as coming “out swinging,” while RBC Capital Markets raised its price target for the automaker from $74 to $85 a share.

“While 2022 guidance mostly in line with expectations (even if different composition), on balance we still walk away encouraged. GM continues to show strong profitability while investing for the future,” RBC analyst Joseph Spak wrote in an investor note Tuesday night.

Here’s additional details on GM’s new EV plans as well as other key takeaways from the company’s fourth-quarter results.

GM said it expects to generate an operating profit this year of between $13 billion and $15 billion, or $6.25 to $7.25 earnings per share. That falls in line with its earnings last year as well as most Wall Street expectations.

What surprised many analysts was GM’s projected production increase of 25% to 30% this year as it continues to manage through a global shortage of semiconductor chips.

Net income this year is expected to fall between $9.4 billion and $10.8 billion, also in line with its $10 billion profit in 2021, GM said.

GM CFO Paul Jacobson said some of its profits this year could be hindered by an increase in sales of lower-margin vehicles as chip supplies improve. The company over the last year has prioritized building highly profitable pickups and SUVs over smaller crossovers and cars.

Barra said GM is not reinstating its dividend at this time to preserve capital to spend on its electric and autonomous vehicle plans. GM plans to spend between about $9 billion and $10 billion a year in the medium term, including in 2022.

“As we move forward, we will consider all opportunities to return excess capital to shareholders, but we will not reinstate a dividend at this time,” Barra said. “Our clear priority is to accelerate our EV plan and drive growth.”

GM cut its dividend…