San Francisco Frontiers - Solid GM results overshadowed by latest jump in commodity costs

The Middle East conflict has fueled a surge in copper, steel and diesel prices, adding $400 million to costs for 2026, Chief Financial Officer Paul Jacobson said on an earnings conference call.

"We have seen a significant amount of inflation... really just in the last probably 10 weeks," he said.

Despite these dynamics, GM reported third-quarter profits of $3.3 billion, more than double last year's level, which was marred by one-time costs connected to unwinding electric vehicle investments.

Revenues rose 2.9 percent to $50.1 billion.

General Motors shares fell 5.3 percent in mid-morning trading.

Although GM saw lower auto sales in North America and some other markets compared with the year-ago level, its average vehicle price of $52,000 was above last year's, reflecting "sustained" demand for large trucks and luxury vehicles, the company said.

GM plans to launch revamped models of the 2027 Chevrolet Silverado and GMC Sierra pickup trucks in the upcoming stretch.

"While the path forward is more challenging, we continue to believe that 2027 will be another strong year and better than 2026, assuming customer demand remains strong and commodity, logistics and other recent cost pressures moderate," Chief Executive Mary Barra told analysts.

The company has sharply slowed its EV ramp-up following regulatory changes enacted by US President Donald Trump. But GM reiterated plans for additional hybrid vehicles and will provide more details closer to the launches.

GM's new $20 billion shareholder repurchase plan follows the completion of its latest $6 billion plan.

Presentation slides from the company emphasized its gradual reduction of outstanding shares over more than a decade as increasing "the potential for operating performance to translate into stronger per-share results."

Since 2015, GM has made $42.7 billion in share repurchases, reducing common shares by 45 percent.

Barra declined to put a timeframe on the newly-announced repurchases.

"We're really trying to signal that we believe the company is undervalued, and so we think this is the best way to provide value for our shareholders," Barra said.

GM now forecasts full-year adjusted earnings of between $12.75 and $13.75 a share, a higher mid-point than the previous outlook.

However, Briefing.com analyst Patrick O'Hare noted that that midpoint of the range is below the level projected by Wall Street analysts.

Equity analysts at JPMorgan Chase described GM's results and outlook as largely in line in a note that pointed to questions about an outlook that describes 2027 as likely "better" but which is conditioned on moderating costs.

"GM has demonstrated strong execution over the last several years, we believe investors are likely to question conviction for now, given increasing commodity and logistics costs," among other questions, JPMorgan said.

M.Gonzalez--SFF