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GM forecasts flat 2020 profit after a rough 2019
GENERAL Motors Co on Wednesday forecast flat profits for 2020 and reported a better than expected fourth quarter result as it kicked off a new effort to win over investors stampeding into shares of electric car rival Tesla Inc. About US$55 billion of Tesla shares were traded on Tuesday as investors piled into a rally that has doubled the electric-car maker's stock price since the start of the year. Morgan Stanley says it doesn't have the answers to investor queries on who is buying the stock, how high can it go or where there might be support.
GM said it expects earnings per share for 2020 in a range from US$5.75 to US$6.25, excluding one-time items, taxes and interest. Analysts are expecting GM to earn US$6.23 this year on a comparable basis, according to IBES data from Refinitiv.
GM's fourth quarter profits took a US$3.6 billion hit from a 40-day United Auto Workers strike that shut down the carmaker's profitable US operations. Profits from its operations in China also fell.
The company said that pre-tax profits were 5 cents a share for the latest quarter excluding certain restructuring costs, down from US$1.43 a year earlier. Analysts had forecast pre-tax income of a penny a share for the latest quarter.
Including restructuring costs, GM had a fourth quarter net loss of US$194 million, or 16 cents a share. Revenue in the quarter fell nearly 20 per cent to US$30.8 billion.
GM said that income from its joint ventures in China fell to US$200 million in the fourth quarter from US$300 million a year earlier, as wholesale vehicle deliveries fell by 20 per cent.
The Detroit company said that "slower adoption of new fuel-efficient technology" by Chinese customers hit fourth quarter results from the world's largest car market. The company is backtracking from an effort to sell vehicles with three-cylinder engines in China, and will offer more four-cylinders. Three-cylinder petrol engines are cleaner and more fuel efficient than their conventional four-cylinder counterparts
GM chief financial officer Dhivya Suryadevara said on Wednesday that the carmaker had "people working around the clock here to mitigate the impact" of disruptions to production and parts supply from China's deadly coronavirus outbreak. GM will make decisions to restart idled operations in China "plant by plant", Ms Suryadevara said.
But even before the virus outbreak, GM expected the Chinese market to be volatile this year. China's vehicle market is maturing, Ms Suryadevara said, which means more competitive pressure on prices and slower growth than in the past. "We are bullish on the Chinese industry and our position in China long term," she told reporters ahead of presentations to analysts. REUTERS