Copyright Bill Pugliano, Getty Images
Industryweek 33366 Barra Mary G Billpugliano 1540 1

GM Breaks from the Gloom with Surprise Forecast for Profit Gain

Jan. 11, 2019
GM to benefit from recent round of cost cuts, a focus on high-margin trucks and SUVs, and a better-than-expected U.S. auto market.

Forget about doom and gloom. General Motors Co. (IW 500/4) said that it will grow profit in 2019 even as global auto sales level off and investors have been expecting a tough year.

The Detroit-based automaker projected 2019 adjusted earnings will rise to between $6.50 and $7 a share, easily exceeding analysts’ $5.92-a-share average estimate. GM also said it will exceed the high end of its profit forecast for last year, which was $6.20 a share.

Key Insights

GM said that its recent round of cost cuts, a focus on high-margin trucks and sport utility vehicles and a better-than-expected U.S. auto market will fuel results that analysts didn’t expect to improve.

The rosy outlook will be cold comfort to many salaried employees, many of whom will find out this month if they are being dismissed as part of a restructuring announced late last year. But GM said that of the 2,800 hourly employees impacted by plans to stop allocating to four U.S. plants, all but roughly 100 will be provided positions.

The cost-cutting moves announced in November will help 2019 earnings by $2 billion to $2.5 billion, Chief Financial Officer Dhivya Suryadevara told reporters in a briefing Friday. GM said the restructuring will help profits by a total of $6 billion by 2020.

GM sees U.S. auto industry sales holding up this year in the low-17 million unit range, a more optimistic view than many analysts. Carmakers sold about 17.3 million vehicles last year. In China, GM expects retail sales to be in line with almost 27 million vehicles last year, but its profit in the region will be down slightly.

Market Reaction

GM shares surged as much as 7.3% to $37.28 as of 8:57 a.m. in New York. The stock dropped 18% last year.

GM also affirmed that Cadillac will be the first to sell an electric vehicle using GM’s all-new battery platform.

By David Welch

Popular Sponsored Recommendations

The Benefits of Continuous Thermal Monitoring

Oct. 17, 2023
Read this eBook to learn more about collecting and using data intelligently to improve performance.

Discover How an Eye Tracking Study Improves Training Procedures

Oct. 29, 2023
Did you know that your training processes can be streamlined by visualizing and analyzing key skills within your employee base? Find out how we use eye tracking to capture advanced...

You Cannot Stay Competitive by Bolting New Technologies to a Legacy ERP

Oct. 20, 2023
Read this white paper to understand the benefits of shifting to a next-generation ERP system as part of a DOP.

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!