General Motors has announced an improvment in its expected financial performance for 2016, a change that will positively impact its quarterly dividend and share repurchase program.
Specifically, GM announced that it will increase its 2016 earnings per share adjusted outlook to between $5.25 and $5.75, up $0.25 from the previous outlook of $5.00 to $5.50, which was announced during GM’s Q3 2015 earnings on October 1st, 2015. In addition, GM expects improved Earnings Before Interest and Taxes (EBIT)-adjusted, EBIT-adjusted margin, and automotive adjusted free cash flow.
Increasing Stock Repurchase Program
Based on this outlook, the GM Board of Directors authorized an increase to the company’s existing common stock repurchase program. The increase brings the total to $9 billion (up $4 billion) while also extending the program through 2017.
Increasing Quarterly Dividend
The Board also authorized an increase in the regular quarterly common stock dividend of 6 percent, to $0.38 per share that will take place in the first quarter of 2016.
The Results Of “Significant Progress”
GM Chairman and CEO Mary Barra, President Dan Ammann, and Executive Vice President and CFO Chuck Stevens shared this outlook with the investment community attending the Deutsche Bank 2016 Global Auto Industry Conference in Detroit.
“We made significant progress executing our strategic plan and the results are being demonstrated through our improved earnings,” Barra said. “Moving forward, we will continue to keep the customer at the center of everything we do. We are making the right investments and taking the actions necessary to lead in the transformation of personal mobility, and positioning the company to continue to drive shareholder value.”
Rationalizing The 2016 Outlook
The company’s 2016 outlook is based on a strong product launch cadence, growth in adjacent businesses, continued emphasis on driving core efficiencies across the enterprise, and expected modest global industry growth.
The company said continued execution of its plan should keep it on track to achieve 9- to 10-percent EBIT-adjusted margin by the beginning of the next decade. The strategic plan calls for sustained growth in the company’s core business and includes several major initiatives:
- Lead in product and technology
- Growing the Chevrolet and Cadillac brands globally
- Continue driving growth in China
- Continue growing GM Financial
- Delivering core operating efficiencies
Among key accomplishments for 2015, the company noted the following:
- On-track to deliver double-digit growth in EBIT-adjusted and EPS-adjusted in calendar year 2015
- Achieved its targeted 10-percent EBIT-adjusted margin in North America – one year ahead of plan
- Since announcing the initial share repurchase program in March 2015, the company repurchased 70 percent of the authorized program through the end of 2015, or $3.5 billion
- All-new 2016 Chevrolet Camaro and Colorado earned Motor Trend car and truck of the year awards
- GM Financial continued to grow as GM’s captive finance unit by tripling its penetration of GM’s U.S. retail sales to approximately 30 percent in calendar year 2015, up from 10 percent in calendar year 2014
- Increased Opel/Vauxhall market share for the third straight year in Europe
- Launched key car-sharing program in the U.S. with “Let’s Drive NYC” and in Europe with Opel’s “CarUnity“, and announced an autonomous car-sharing program on the Warren Technical Center campus with Chevrolet Volts
- Announced a long-term strategic alliance with Lyft
GM also outlined several actions designed to improve its capital efficiency, resulting in a significant reduction in longer-term capital expenditures. The automaker continues to expect capital expenditures of 5- to 5.5-percent of revenues in the near-term.
“Our commitment to improve our performance in 2016 will build on our strong operating results of the past two years, and support improved shareholder returns,” Stevens said.