GM offers aggressive outlook in CEO Barra's 'do-over' year
By Ben Klayman
DETROIT (Reuters) - General Motors Co (GM.N: Quote) Chief Executive Officer Mary Barra said on Wednesday the largest U.S. automaker would increase its profit this year, as she counted on investors to give her a second chance after her first year behind the wheel was marred by a costly recall scandal.
While GM gave no specific figures, it said it expects pretax earnings and profit margins to increase this year over 2014, after adjusting for the recall costs, citing growth in its two largest markets - China and the United States. The automaker also stood by 2016 targets for 10 percent profit margins in North America and a return to profitability in Europe.
Some analysts found the projections overly positive, however, given weakness in several overseas markets.
"It's a very aggressive outlook," said Mirko Mikelic, senior portfolio manager with Clear Arc Capital, which does not own GM stock but follows it closely. "It's really going to depend on a lot of these global economies turning around quickly and we don't see that happening."
GM shares were down 4.1 percent at $33.81 on Wednesday afternoon, amid a broad selloff by investors worried about weak global growth. GM shares are trading just above the 2010 initial public stock offering price of $33. The automaker was hit hard by the 2008 financial crisis and emerged from a U.S. government-directed bankruptcy in 2009.
Barra's first year as CEO, 2014, was dominated by the recalls of 2.6 million cars due to a defective ignition switch that has been linked to at least 45 deaths. That issue led to Congressional hearings, federal probes and numerous lawsuits, as well as increased recalls of GM vehicles for other problems.
"We would have never been able to predict what we faced," Barra told investors at a Deutsche Bank conference held in conjunction with the Detroit auto show.
All told, GM took charges totaling more than $3 billion for the issues. Continued...