Autoworker strike cost GM $1.1B, a cost it says it can absorb as it announces massive stock buyback
General Motors says pretax earnings took a $1.1 billion hit this year due to a six-week strike by autoworkers, but the company expects to absorb increased labor costs and have enough left to buy back stock worth nearly one quarter of the company’s $44 billion market value.
The Detroit automaker on Wednesday said it would increase its dividend by one-third in January to 12 cents per share and buy back $10 billion worth of stock, with $6.8 billion being acquired immediately.
Shares of GM rose nearly 11% Wednesday after the stock buyback was announced, but they are still down about 27% in the past year.
GM sees $9.3 billion hit from labor deals, outlines $10 billion buyback
(Reuters) -General Motors said on Wednesday its new labor deals after a lengthy U.S. strike will cost it $9.3 billion even as it outlined $10 billion in share buybacks, a 33% dividend increase and “substantially lower” spending at its robotaxi unit Cruise.
The buyback is the equivalent at Tuesday’s closing price to nearly a quarter of GM’s common stock. Its shares were down about 14% this year before rising 9.8% to $31.71 on Wednesday. The stock is still below the $33.66 price it closed at just ahead of the UAW strike’s start on Sept. 15.