Strike Cuts GM’s 3Q Revenue, Earnings

General Motors Co. says the first two weeks of the just-ended 40-day strike at its U.S. factories cut its third-quarter pretax earnings in North America by $1 billion.

GM says the strike, which continued into the first four two weeks of the fourth quarter, will cost the company $2 per share, or about $3 billion, this year. The carmaker emphasizes that its underlying operations, especially in North America, remained strong in spite of the walkout.

CEO Mary Barra says GM’s new four-year labor contract with the United Auto Workers union, which will increase future labor costs, also preserves GM’s operating flexibility—a key goal for the company in this year’s negotiations.

GM’s worldwide wholesales, which ignore activity by its joint ventures, fell 9% to 1.03 million vehicles in July-August. Retail sales, including those to fleets and by joint ventures, declined 6% to 1.87 million units.

The company’s third-quarter net revenue slipped 1% to $35.5 billion. Net income fell 9% to $2.3 billion. Adjusted earnings before interest and taxes dropped 6% to $3 billion.

Retail sales in the U.S. climbed 6% to 739,000 units, thanks to strong demand for SUV/crossover and pickup trucks. But volume shrank 17% to 690,000 vehicles in China, where economic growth has slowed.

GM lowered its full-year guidance, cutting capital expenditures by roughly $1 billion and slashing its automotive free cash flow from an expected range of $4.5 billion-$6 billion to between zero and $1 billion.

The company now expects adjusted earnings per share in 2019 between $4.50 and $4.80, compared with earlier guidance of $6.50-$7.00.