US auto major increases stock repurchase program
January 12, 2017: General Motors Co. (NYSE: GM) said it expects its 2017 earnings per share (EPS) diluted-adjusted to increase to $6.00-$6.50, up from its 2016 calendar-year outlook of $5.50-$6.00. In 2017, the company also expects to maintain or improve EBIT-adjusted and EBIT-adjusted margin on higher revenues, compared to 2016, and generate about $6 billion of automotive-adjusted free cash flow.
Based on this strong outlook, the GM Board of Directors approved an additional $5 billion in common stock repurchases under its existing share repurchase program, which was announced on March 9, 2015. The new authorisation, which has no expiration date, brings the total under the program to $14 billion.
Share buybacks for the program’s initial authorisation of $5 billion were completed in the third quarter of 2016, one quarter earlier than planned. In the fourth quarter of 2016, the company also completed $1 billion of the next $4 billion authorisation declared in January 2016. The company expects to meet its prior commitment to repurchase $9 billion of common stock by the end of 2017.
GM also announced a $1 billion increase to its cost efficiency target, raising it to $6.5 billion through 2018, of which about $4 billion has already been achieved through 2016. The increased estimate is based on expected additional savings in material, logistics, manufacturing and general administrative costs.
Chairman and CEO Mary Barra, President Dan Ammann and Executive Vice President and CFO Chuck Stevens shared this outlook with the investors and analysts attending the Deutsche Bank 2017 Global Auto Industry Conference in Detroit.
“We’ve generated consistently strong results the last few years by delivering great vehicles, growing the topline and driving efficiencies while at the same time establishing a leading position in shaping the future of transportation,” Barra said. “We’ll stay focused on executing our strategic plan and generating the profitable growth needed to create long-term value for our shareholders.”
GM’s 2017 outlook is based on expected strong performance in North America and China, growth of GM Financial, continued cost efficiencies, improvement in South America and an ongoing strong vehicle launch cadence.
Specifically, the company anticipates the proportion of its global volume from new or refreshed vehicles – those in production less than 18 months – to grow to 38 percent in the 2017-2020 timeframe, up from 26 percent during the 2011-2016 period. Crossovers, trucks and SUVs as a proportion of GM’s global volume of new or refreshed vehicles in the 2017-2020 period are expected to increase significantly, to 52 percent – up from 38 percent the prior six years.