GM says worst of global chip shortage may be behind it

General Motors employees work on the assembly line Friday, April 26, 2019 at Fairfax Assembly & Stamping Plant in Kansas City, Kansas. The Fairfax facility produces the Cadillac XT4 and Chevrolet Malibu.

Jim Barcus for GM

General Motors believes the worst of a global chip shortage, which has forced automakers to cut production and close plants is over.

The company’s finance chief said this development has led to optimism that GM will achieve its guidance for the year.

“Over the last couple of weeks as we talked about this being a volatile situation, we’ve actually seen the situation get better for us,” GM CFO Paul Jacobson said during a Wolfe Research conference Wednesday afternoon. “At this point I would say that we’re highly confident about being able to hit our guidance that we put out to The Street.”

GM said earlier this month it expected to earn $10 billion to $11 billion, or $4.50 to $5.25 per share, in adjusted pretax profits this year.

It projects adjusted free cash flow of $1 billion to $2 billion for its automotive division in 2021. The forecasts factor in the potential impact of the chip shortage, including a hit of $1.5 billion to $2.5 billion to its free cash flow.

This is a developing story. Check back for updates.

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