General Motors Co (GM) on Friday projected strong profits for this year, fueled by savings from a deep restructuring, including job cuts, and solid sales in the US and China.
GM, which has faced criticism from US President Donald Trump and other US politicians over the planned layoffs, expects US$2 billion to 2.5 billion in additional profits this year due to the restructuring, pushing its earnings-per-share forecast well above analyst expectations.
The biggest US automaker forecast profits of US$6.50 to US$7 a share this year, compared with the US$5.88 now expected by Wall Street analysts.
Photo: Reuters
GM also said it sees last year’s earnings per share as exceeding analyst expectations.
GM has defended the job cuts as needed to position the company long-term, in part by providing funds to build autonomous cars and other new offerings.
“We are focused on strengthening our cash generation and creating efficiencies that will position us to take advantage of opportunities through the cycle,” GM chief financial officer Dhivya Suryadevara said in a statement.
Shares of the auto giant surged 7.1 percent to US$37.18.
GM also announced plans to position its electric cars under the Cadillac brand and to launch a new global line of lower-cost models aimed at emerging markets.
Global markets have been shaken in the past few weeks amid worries over slowing global growth due in part to weakness in China amid the trade confrontation with Washington, and to some forecasts indicating that the US would tip into recession next year.
Yet GM offered a solid outlook for its home market, estimating overall US sales this year in the “low 17-million range,” a good level, and projecting no sales drop in China.
GM’s US auto sales are expected to be revved up by new sport-utility vehicles coming to market, and by a full calendar year of sales of pickup trucks unveiled last year that have been hot sellers amid low gasoline prices.
The company plans new launches in China, although it also sees continued pricing pressure. Overall, GM expects a “moderate decline” in profits from China, Suryadevara told reporters
GM chief executive officer Mary Barra was upbeat on the prospects for a US-China trade deal, characterizing this week’s talks between US and Chinese officials as “constructive.”
According to news reports the next round of talks is set for the end of this month in Washington.
It was a “good sign” that the two governments already had plans for additional negotiations, Barra said, adding that sales in China could also be boosted by government stimulus spending.
The automaker said Cadillac would become its “lead” electric brand, a shift from its current structure where the first models have been under Chevrolet. The move positions GM to compete with Tesla Inc in the high-end market.
GM said it is on track to launch a new global vehicle this year aimed at emerging markets, beginning in China, followed by South America and Mexico.
The vehicles are expected to account for 10 percent of GM’s global sales by next year.
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