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GM seen following Chrysler, Ford with solid results

GM has reinstated its common stock dividend.

DAVE CHIDLEY/The Canadian Press

The parade of profits for the Detroit Three auto makers should continue this week as General Motors Co. reports full-year and fourth-quarter results that will illustrate how well the company fared during the best year for U.S. vehicle sales the industry has experienced since the 2008-2009 financial crisis.

The consensus forecast is that GM will report profit of 88 cents (U.S.) a share for the fourth quarter of 2013 when it releases results on Thursday.

That will follow solid profits at Chrysler Group LLC and Ford Motor Co.

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But the importance of that figure has been reduced somewhat in recent weeks by the restoration of a dividend and the presence of a new management team that moved into the executive suite last month.

That team is headed by new chief executive Mary Barra, a three-decade GM veteran who becomes the first home-grown CEO since the brief tenure of Fritz Henderson after GM's Chapter 11 bankruptcy filing in 2009.

Even though the team is new, investors will be looking for

evidence that some old issues are being addressed.

GM's troubled European operations are still in the midst of a restructuring and the company needs to make sure a flood of new and redesigned vehicles introduced last year – with more to come this year – is gaining traction

"The main theme here for 2014 is that we are taking advantage of the strength in North America and in China to fund restructuring activity elsewhere," Dan Amman, who moves into the president's chair from the chief financial officer's job, told analysts last month.

The company has already pointed to 2014 results being lower than the consensus of analysts' estimates of $4.58 a share.

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Observers will be watching for any revelations about the potential effects from the turmoil in emerging markets that has erupted in recent weeks.

"2014 is about executing in North America and managing through the regions," RBC Dominion Securties analyst Joseph Spak said in a research note last month.

Mr. Spak forecasts share profit of 80 cents for the final quarter of 2013, but lowered his forecast for 2014 profit to $3.85 from $4.65 after Mr. Amman's presentation last month.

Barclays Bank PLC analyst Brian Johnson believes GM will use some of its $27-billion in cash to buy back shares, possibly the 110 million shares held by the federal and Ontario governments, worth about $4-billion based on Friday's closing price of $36.08 for GM shares on the New York Stock Exchange. But Mr. Johnson does not expect that buyback to happen until the second half of the year.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More


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