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GM gives strong 2019 earnings forecast, shares jump 8 percent

Reuters 

By Nick and Ajmera

(Reuters) - on Friday gave a strong earnings forecast for 2019 powered by its revamped and highly-profitable pickup truck lineup, sending the No. 1 U.S. automaker's shares up 8 percent in early trading.

GM said that despite an industrywide decline in U.S. passenger car sales, the overall market would remain resilient in 2019.

The battle for profits from sales of large pickup trucks is intensifying among the Three automakers as sales of small cars in the shrivel. Both GM and have launched revamped pickup trucks in a bid to take more share in the U.S. auto industry's most profitable segment.

GM said it expected industry auto sales in to stay roughly flat in 2019 and that it "will remain agile in responding to shifting market dynamics" while launching more than 20 new or revamped vehicles in that market in 2019.

Auto sales in have suffered their worst slump in decades, and on Friday reported that plans to set a lower target for economic growth in 2019, in part reflecting the impact of the trade war with the

GM, with its Chinese partners, sells more vehicles in China than in the The automaker builds locally most of the vehicles it sells in China.

GM's outlook for China runs counter to recent gloomy forecasts from other corporate titans. Apple Inc, for instance, last week took the rare step of cutting its quarterly sales forecast, blaming slowing sales in China.

GM said it expects 2019 adjusted earnings per share in the range of $6.50 to $7.00, above the $5.86 expected by analysts according to IBES data from Refinitiv.

"Bottom line, we believe management just reset the bar higher for earnings and cash flow despite increased macro concerns among investors," wrote in a client note.

The company said it expects adjusted automotive free cash flow in 2019 to come in between $4.5 billion and $6 billion.

"We are focused on strengthening our cash generation and creating efficiencies that will position us to take advantage of opportunities through the cycle," GM said in a statement.

GM said that it also expects its 2018 earnings per share to come in above its previous forecast. The carmaker said in October it expected adjusted 2018 earnings of $5.80-$6.20 per share.

The company also expects adjusted free cash flow for 2018 to be above its previous guidance of $4 billion.

The automaker lowered that 2018 cash flow figure, which excludes the impact of $600 million in pension contributions, last year due to the impact of tariffs imposed by U.S.

GM cited that negative free cash flow as one reason for decisions announced in November to put five North American factories, including four in the United States, on notice for closure, and cut almost 15,000 jobs.

"We will continue to strengthen our core business and invest in the technologies that will transform the future of mobility. Managing both well is critical to position General Motors for success for generations to come," Officer said.

In morning trading on the New York Stock Exchange, GM shares were up 8.4 percent at $37.65.

(Reporting by Nick in and in Bengaluru; Editing by and Susan Thomas)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 11 2019. 20:44 IST
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