GM predicts improved profitability in 2015

General Motors expects its total earnings before interest and tax (EBIT) adjusted and EBIT-adjusted margin to increase in 2015, compared to 2014, after adjusting 2014 for the impact of recall costs. The company also anticipates improved automotive results in all regions.

This outlook is based on modest global industry growth expected in 2015, which will result primarily from continued growth in China, Europe and the United States, and ongoing launches of key vehicles.

CEO Mary Barra, president Dan Ammann, and executive vice-president and chief financial officer Chuck Stevens shared this outlook with investor analysts attending the Deutsche Bank 2015 Global Auto Industry Conference in Detroit. 

GM reiterated it is on track to meet its previously announced 2016 financial targets to achieve EBIT-adjusted margins in North America of 10 percent; to return to profitability in Europe, and to maintain strong margins in China.

The company also said its plan puts it on the path to achieve 9- to 10-percent margins by early next decade. The strategic plan, shared during the Global Business Conference in October 2014, includes several major initiatives: lead in product and technology; grow the Chevrolet and Cadillac brands globally; continue growing in China; continue growing GM Financial, and deliver core operating efficiencies.

“We had a pivotal year in 2014, outlining a customer-focused strategic plan for the company and delivering on our commitments by achieving strong core operating performance,” Barra said. “We’ll build on this momentum in 2015 and continue executing our plan to become the most-valued automotive company.”

According to Barra, the key accomplishments for 2014 include:

- Earned the most J.D. Power Initial Quality Study awards for second consecutive year in the United States.

- Launched more models in North America with 4G LTE mobile broadband than all other automakers combined.

- GM and its joint ventures sold a record 3.5 million vehicles in China, up 12.0 percent from 2013.

- Opel/Vauxhall market share in Europe grew for the second year in a row, including increases in 12 European markets.

- Achieved five straight quarters of EBIT-adjusted margin growth in North America through the third quarter of 2014 (excluding recalls).

- Standard & Poor’s upgraded GM and GM Financial to investment grade.

- Returned $2.0 billion to common stock shareholders through dividends.

To support its future growth, GM plans to increase capital expenditure to approximately $9 billion (Rs 56,853 crore) in 2015, reflecting increased investments in products and technologies.

“Overall, 2014 was a very solid year in which we met expectations on core operating performance, despite a number of significant headwinds. Importantly, improvements in 2015 will keep us firmly on track to meet our near-term objectives and demonstrate solid progress toward our targeted margins of 9 to 10 percent by early next decade,” said Stevens.