March 17, 2005
GM revises earnings outlook
Detroit, Michigan – General Motors Corporation announced yesterday that it is revising its first-quarter and calendar-year earnings guidance to reflect lower North American sales and production volumes, a tougher pricing environment, and a more car-based sales mix. At the same time, GM’s other automotive regions and GMAC are on track to meet or beat their 2005 net income targets.
“Clearly we have significant challenges in North America,” said GM Chairman and CEO Rick Wagoner. “The rest of our automotive businesses, and GMAC, are running in line with, or ahead of, our expectations. But North America is our biggest business, and the key driver of automotive earnings and cash flow. So it’s important that we get this business right.”
GM said it now expects to report a loss of approximately US$1.50 per fully diluted share in the first quarter of 2005, excluding special items. For the calendar year, it expects to report earnings of approximately US$1 to US$2 per share, excluding special items. Previously, the company’s target was breakeven or better for the quarter, and US$4 to US$5 per share.
The company also expects negative operating cash flow in 2005 of approximately US$2 billion, before the Fiat settlement and GM Europe restructuring. It had targeted a positive US$2 billion. Its 2005 corporate capital spending remains at approximately US$8 billion, or US$1 billion above 2004 levels.
Its forecast was based on North American vehicle production volume of 1.25 million vehicles, but production schedules have been reduced by approximately 70,000 vehicles. Pricing has also been more competitive than expected in North America.