General Motors Company (GM) announced that it expects total adjusted earnings before interest and tax (EBIT) and adjusted EBIT margin to rise in 2015 over 2014 levels. The automaker also predicted that it will report improved results in all regions. The company expects the improved results in 2015 to be driven by modest global industry improvement, based on continued growth in China, Europe and the U.S., together with the launch of key vehicles.
Further, General Motors reaffirmed its financial targets and said that in 2016, it expects to achieve adjusted EBIT margin of 10% in North America. The company also expects to record profits in Europe by 2016. Meanwhile, in China, net income margins are likely to be between 9% and 10% by 2016.
In Oct 2014, General Motors had announced a strategic plan intended to enhance customer benefit, boost growth and shareholder value. The company expects enforcement of this strategic plan to prove accretive to margins by 9%–10% on EBIT-adjusted basis by early next decade. The company plans to launch new products and technology, expand the Chevrolet and Cadillac brands globally, expand in China and improve GM Financial’s results.
General Motors recorded solid operating performance in 2014 despite the headwinds of a series of safety recalls. In 2014, global sales of the company and its dealers were 9,924,880 vehicles, increasing 2% year over year. Last year, the automaker achieved the J.D. Power Initial Quality Study awards in the U.S for the second consecutive year. The company also launched many vehicles with 4G LTE mobile broadband in North America.
In China, General Motors, along with its joint ventures, sold 3.5 million vehicles. The Opel/Vauxhall brand’s market share in Europe increased along with growth in 12 European markets. In addition, Standard & Poor's upgraded the company and GM Financial to investment grade. General Motors also returned $2 billion to its shareholders through dividends.
General Motors anticipates that it will build on this momentum in 2015 and also try to become the most-valued automotive company. The automaker plans to launch many products over the next couple of years, including the new Chevrolet Cruze compact car, the Chevy Malibu midsize car and the Chevrolet Equinox small crossover SUV.
The company anticipates generating 27% of its global vehicle sales from new vehicles this year. Also, it expects sales to rise to 38% in 2016 and 2017. The automaker intends to increase capital expenditures to approximately $9 billion in 2015 for the development of products and technologies.
Currently, General Motors carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include Meritor, Inc. (MTOR), PACCAR Inc. (PCAR) and Magna International Inc. (MGA). All these stocks carry a Zacks Rank #2 (Buy).
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