GM Eyes Modest 2014 Growth Higher Restructuring Costs

GM Eyes Modest 2014 Growth, Higher Restructuring Costs

The biggest U.S.-based automaker forecast "modestly higher" pre-tax adjusted earnings thanks to growth in the U.S., China and Europe. Profit margins will be similar to those in 2013, GM said.

NEW YORK -- General Motors (IW 500/5) said today it expects "modest" global industry growth and a better operating performance in 2014 to more than offset a large rise in restructuring costs.

The biggest U.S.-based automaker forecast "modestly higher" pre-tax adjusted earnings thanks to growth in the U.S., China and Europe. Profit margins will be similar to those in 2013, GM said.

But GM anticipates 2014 restructuring costs of $1.1 billion, up from the $400 million to $500 million it has incurred in recent years, according to a presentation at the Detroit auto show.

GM president Dan Ammann told analysts that the restructuring costs arise from plant closings in Germany and Australia, the exit of Chevrolet from Europe and some "incremental restructuring" in South America.

"The key message is we are taking advantage of strength in North America and China to really take aggressive and assertive steps to fix other parts of the business," such as Europe, Ammann said.

GM forecasts overall auto industry growth of about 2% in 2014, down from the 4% to 5% annual growth of the last few years, Ammann said.

"We see our market share being flat to perhaps slightly up, depending on where you are in the world," Ammann said.

On Tuesday, GM announced that it intends to begin paying a quarterly dividend in March, the first time since the company's 2008 government rescue.

The outlook also comes at a turning point for GM. Mary Barra is taking the reins as the first female CEO of a large automaker with today's retirement of outgoing CEO Dan Akerson.

RBC Capital rated GM's 2014 forecast "slightly disappointing" but said the cautious guidance gives new company management "a little more wiggle room to deal with their first year."

Yesterday's better-than-expected dividend announcement "should add a little support," RBC added.

Copyright Agence France-Presse, 2014

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