Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

GM forecasts flat 2020 profit after a rough 2019; shares gain

Stock MarketsFeb 05, 2020 09:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

By Ben Klayman and Joseph White

DETROIT (Reuters) - General Motors Co (N:GM) 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 (O:TSLA).

The automaker's shares were up 1.8% in early trading.

GM said it expects earnings per share for 2020 in a range from $5.75 to $6.25, excluding one time items, taxes and interest. Analysts are expecting GM to earn $6.23 this year on a comparable basis, according to IBES data from Refinitiv.

The automaker forecast $6 billion to $7.5 billion of automotive free cash flow this year, a range that extends above the $6.5 billion GM's auto operations could have generated in 2019 excluding the costs of the 40-day United Auto Workers strike last fall.

GM expects U.S. car and light truck sales to fall by about 500,000 vehicles from last year's 17.1 million.

"Good enough," J.P. Morgan analyst Ryan Brinkman wrote about GM's 2020 guidance in a note Wednesday morning.

GM appeared to be getting better treatment from Wall Street than rival Ford Motor Co's (N:F), whose shares slumped Wednesday after the company on Tuesday delivered a weaker-than-expected 2020 forecast. Ford warned of higher warranty costs, lower profits at its credit arm and continued investments in future technology such as self-driving cars.

GM's fourth quarter profits took a $3.6 billion hit from a 40-day United Auto Workers strike that shut down the automaker's profitable U.S. operations. Profits from its operations in China also fell.

The company said pre-tax profits were 5 cents a share for the latest quarter excluding certain restructuring costs, down from $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 $194 million, or 16 cents a share.

Revenue in the quarter fell nearly 20% to $30.8 billion.

GM said income from its joint ventures in China fell to $200 million in the fourth quarter from $300 million a year earlier, as wholesale vehicle deliveries fell by 20%.

The Detroit company said “slower adoption of new fuel-efficient technology” by Chinese customers hit fourth quarter results from the world’s largest auto market. The company is backtracking from an effort to sell vehicles with three-cylinder engines in China, and will offer more four-cylinders.

GM Chief Financial Officer Dhivya Suryadevara said Wednesday the automaker 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," Suryadevara said.

But even before the virus outbreak, GM expected the Chinese market to be volatile this year. China's auto market is maturing, 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.

GM forecasts flat 2020 profit after a rough 2019; shares gain

Related Articles

Danone doubles supply of some baby formula to U.S.
Danone doubles supply of some baby formula to U.S. By Reuters - May 25, 2022

By Richa Naidu LONDON (Reuters) - Danone SA (OTC:DANOY) on Wednesday said it has been doubling shipments to the United States of Neocate formula for infants allergic to cow's...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email