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GM sees higher 2019 profits on job cuts, solid US, China sales
NEW YORK, Jan 12, 2019 (BSS/AFP) – General Motors projected strong 2019
profits Friday, fueled by savings from a deep restructuring including job
cuts, and by solid sales in the United States and China.
GM, which has faced criticism from President Donald Trump and other US
politicians over the planned layoffs, expects $2-2.5 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 2019 profits of $6.50 to $7.00 a share,
compared to the $5.88 now expected by Wall Street analysts. GM also said it
sees 2018 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,” Chief Financial Officer Dhivya Suryadevara said in a statement.
Shares of the auto giant surged 7.1 percent to $37.18.
The auto giant also announced plans in 2019 to position its electric cars
under the Cadillac brand and to launch a new global line of lower-cost models
aimed at emerging markets.
– Upbeat on trade talks –
Global markets have been shaken in recent 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 the US will tip into
recession in 2020.
But GM offered a solid outlook for its home market, estimating overall US
sales in 2019 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 in 2018 that have been hot sellers amid low gasoline prices.
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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 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 late January
in Washington.
Barra told reporters it was a “good sign” that the two governments already
had plans for additional negotiations, adding that sales in China also could
be boosted by government stimulus spending.
GM in December announced a plan to cut thousands of jobs and shutter seven
plants worldwide, including five in North America.
The announcement drew heavy criticism not only from Trump, but from
Canadian Prime Minister Justin Trudeau, labor unions, senior lawmakers in the
US Congress and labor unions.
Barra said the company has no plans for further downsizing at this time.
The automaker said Cadillac would become its “lead” electric brand, a
shift from the current structure where the first models have been under
Chevrolet. The move positions GM to compete with Tesla in the high-end
market.
GM said it was on track to launch in 2019 a new global vehicle 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
2020.
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