Exclusive: Shareholders may get more cash back later in 2015 - GM CFO

Wed Feb 4, 2015 2:14pm EST
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By Ben Klayman

DETROIT (Reuters) - General Motors Co will consider returning more cash to shareholders later this year, on top of a planned 20-percent dividend increase announced Wednesday, the company's chief financial officer told Reuters.

GM CFO Chuck Stevens said in an interview before releasing its fourth quarter results on Wednesday that further return of capital to investors could happen as soon as legal issues tied to the recall of a defective ignition switch linked to at least 51 deaths are resolved. He added GM prefers to carry the high end of its targeted cash range of $20 billion to $25 billion until then.

"As we get more clarity on those open items, I would expect that we would continue to evaluate further return of capital to shareholders and that could happen as soon as the second half of this year," he told Reuters.

Stevens said the planned increase, which will boost the company's annual outlay for dividends by about $400 million to $2.4 billion, was due to the strong 2014 results and stronger performance expected this year.

GM's earnings were far above analysts' expectations, as strong sales in North America helped offset record recall costs there. Its shares rose more than 3 percent in early trade.

Since emerging from a U.S. government-directed bankruptcy in 2009, GM has rebounded along with U.S. auto sales. Booming demand, particularly for high-margin pickups and sport utility vehicles, has helped GM stockpile nearly $40 billion in total liquidity.

Some shareholders had complained that the automaker has more than enough to fund its global ambitions and that executives at the largest U.S. automaker should return to investors up to $10 billion of that.

"GM shouldn't hoard cash if it cannot deploy it at an attractive rate of return," Michael Kon, senior analyst with Golub Group, which owns GM shares in its equity fund, said before GM announced plans to boost the dividend.   Continued...

The General Motors world headquarters is seen in downtown Detroit, Michigan in this file photo taken on May 31, 2009. REUTERS/Rebecca Cook