General Motors has had a pretty good day, announcing that it would increase its buy-back plans by 80% to $9 billion through 2017, while also raising it’s quarterly dividend, and raising its earning-per-share expectations.
Themes for the next decade: Cannabis, 5G, and EVs
General Motors‘ share buy back program to grow substantially
General Motors announced today that its share buy-back announced last year would be elevated to $9 billion, an 80% increase, and would continue through 2017. The statement was made as the company announced that it had reached its goal of 10% operating margin in North America in 2015, something that it hadn’t expected to occur before the end of 2016 due to improved earnings.
“We made significant progress in executing our strategic plan and the results are being demonstrated through our improved earnings,” GM CEO Mary Barra said in a statement. The company’s domestic margins are adjusted before interest and tax.
In addition to increasing its plans for a stock-repurchase, the company increased its quarterly dividend by 6% to $0.38, and while GM expected earning-per-share of $5.00 to $5.50 for the year, it now expects EPS to come in between $5.25 and $5.75.
The announcement by the United States’ biggest automaker came on the heels of an announcement from Ford yesterday that it was planning a supplemental $1 billion dividend after determining that it would likely beat 2015 profits that are largely expected to be a record for Ford.
While GM is expecting oil prices to remain low in the short and mid-term, the company has no intention to shift its manufacturing to accommodate a growing demand for trucks and SUVs.
“Our view on oil prices (is) generally lower for longer, and clearly that is a benefit,” General Motors Chief Financial Officer Chuck Stevens
International expectations and today’s trading
General Motors President Dan Ammann said that he expects modest growth internationally for 2016 effectively mirroring 2015. Ms. Barra says the company is still optimistic in China and hopes to break even in Europe in 2016.
As of this writing (12:30PM EST), GM was up 1.01% at $30.60 per share on heavy trading. GM shares enjoy a daily volume of just north of 12 million shares over the last three months, but in today’s half day of trading, over 16 million shares have already been traded.
Last year saw more new vehicles sold in the United States than ever before, something that President Obama happily noted in his final State of the Union address last evening.