|
Classic Caddy's.com - Home
|
GM Posts $865 Million Net Income in Push for Offering |
|
Written by Big Block
|
|
Monday, 24 May 2010 19:23 |
|
There are no translations available.
By Katie Merx and David Welch
May 17 (Bloomberg) — General Motors Co. reported first- quarter net income of $865 million, helped by higher production and smaller discounts, as the maker of the GMC Terrain and the Chevrolet Equinox works toward an initial public offering.
Operating profit was $1.2 billion in the first three months of the year, and the company generated $1 billion in free cash flow, Detroit-based GM said today in a statement. Revenue rose 40 percent from the same period a year earlier to $31.5 billion.
Chief Executive Officer Ed Whitacre has said reporting a profit is a necessary milestone as the biggest U.S. automaker seeks freedom from government ownership. GM, which emerged from bankruptcy protection in July, is considering a return to the auto-lending business to make its offering more appealing to investors, people familiar with the plans said last week.
“The unfortunate process of bankruptcy is yielding positive results,” Rebecca Lindland, an analyst at IHS Global Insight in Lexington, Massachusetts, said today in an interview. “It certainly keeps them on track for an IPO.”
GM North America and the company’s international operations each had profits before interest and taxes of $1.2 billion, while the automaker had a $500 million loss in Europe.
GM’s 8.375 percent bonds due in July 2033 rose 2.125 cents to 37 cents on the dollar at 10:24 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt was issued by predecessor General Motors Corp. and will convert into equity in the new GM.
Sustained Profitability
GM Chief Financial Officer Chris Liddell told reporters today that GM was making progress toward sustained profitability for the rest of the year, without providing specific numbers.
The most-recent quarter’s results were helped by traditionally strong production at the start of the year, Liddell said, adding that output may weaken in the coming quarters.
“This is a good, useful step on the road to the IPO,” Liddell told reporters today.
GM’s sales in the U.S. rose 16.8 percent to 475,253 vehicles in the first quarter from 406,770 a year earlier, according to researcher Autodata Corp. GM trimmed its U.S. customer discounts in the first quarter by an average of $230 per vehicle, or 6.7 percent, to $3,222, according to Autodata.
Production Gains
The automaker said it built 668,000 vehicles in North America, an 80 percent increase from the same months last year. GM will produce 2.7 million vehicles on the continent this year, a 44 percent gain from 2009, according to Michael Robinet, vice president of global forecasting for CSM Worldwide in Northville, Michigan.
“Some people didn’t expect them to make a profit,” Robinet said today in an interview. “If they are on track with respect to profit, than they can reinvest in product. That is critical in the auto industry.”
GM posted a fourth-quarter loss of $3.4 billion and used $1.9 billion in cash. For the third quarter, a period that began with the end of bankruptcy on July 10, GM said generated $3.3 billion in cash and lost $1.15 billion on what it called a managerial basis. It reported a net profit, including the company’s recapitalization.
Brands Cut
GM filed for protection from creditors on June 1, 2009, and emerged on July 10 with Whitacre, 68, as chairman. He took on the chief executive officer’s job in December and has shuffled management and cut brands to four from eight. The old General Motors Corp. had a $5.98 billion net loss in the first quarter of 2009.
The company has repaid $8.4 billion in U.S. and Canadian loans it assumed as it emerged from bankruptcy and is seeking to return to profit before offering shares publicly, allowing the U.S. to sell the 61 percent stake it acquired in the $50 billion bailout.
GM now has about $18.2 billion in debt and obligations, including $8.8 billion owed to the United Auto Workers retiree health care trust fund, Liddell said today.
“There is still a significant number of obligations,” Liddell said. “One of the relatively pleasant surprises coming in here was that our balance sheet is relatively strong. I’d like to see the balance sheet a lot stronger.”
The U.S. will probably sell its GM stock over “a few years,” Liddell said in a Bloomberg Television interview.
Bank Talks
The U.S. Treasury is talking with banks including Greenhill & Co., Lazard Ltd. and Perella Weinberg Partners about advising the department on the company’s return to public trading, a person with direct knowledge of the matter said last week.
GM hasn’t issued any new debt since exiting bankruptcy and has no rating. The company and rival Ford Motor Co. will need profits and cash flow to attain investment-grade credit status, said Mark Oline, head of corporate ratings at Fitch Ratings in New York. Ford earned $2.1 billion in the first quarter.
GM has said it needs better performance from its Opel unit in Europe, the only regional unit to lose money in the quarter. Opel Chief Executive Officer Nick Reilly told the Tagesspiegel newspaper this month that sales in Western Europe won’t return to 2007 levels for at least five years.
GM decided to keep Opel in November after negotiating a deal to sell the Ruesselsheim, Germany-based unit to Canada’s Magna International Inc. and Russian lender OAO Sberbank.
Whitacre has retooled the company’s marketing arm, changing U.S. sales and marketing leadership three times since December. On May 5, he hired Nissan Motor Co.’s Joel Ewanick as vice president of marketing to replace Susan Docherty, who held the job for two months and will be reassigned.
Ewanick will be responsible for delivering more sales as the company devotes marketing resources to fewer brands. GM is focusing on Chevrolet, Buick, GMC and Cadillac in the U.S., selling Saab and shutting down Saturn, Pontiac and Hummer.
To contact the reporters on this story: Katie Merx in Southfield, Michigan, at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
; David Welch in Southfield, Michigan, at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
. |
|
Last Updated on Wednesday, 04 August 2010 07:26 |
|
|
GM To Invest $890 Million To Build Cleaner, More Fuel-Efficient Engines |
|
Written by Big Block
|
|
Thursday, 29 April 2010 10:52 |
|
DETROIT – General Motors will invest more than $890 million which will create or retain more than 1,600 jobs in five North American plants to produce a new generation of fuel efficient small block truck and car engines. The investment consists of the following:
Two plants will support the engine production:
-
- Tonawanda, N.Y. – an investment of $400 million resulting in more than 710 jobs
- St. Catharines, Ontario – an investment of $235 million resulting in approximately 400 jobs
- Three plants will support engine casting and component production:
- Defiance, Ohio – an investment of $115 million resulting in up to 189 jobs
- Bedford, Ind. – an investment of $111 million resulting in about 245 jobs
- Bay City, Mich. – an investment of $32 million resulting in over 80 jobs
The investments include facility renovation and installation of new, highly flexible engine machining and assembly equipment and special tooling designed for manufacturing efficiency and engine quality. At the casting facilities, investments include expansion of semi-permanent mold and precision sand casting technologies that result in a high degree of dimensional accuracy and material strength properties needed to support the newer, more efficient engines in GM’s product portfolio.
“GM is investing in our plants, restoring and creating jobs and making progress toward our vision of designing, building and selling the world’s best vehicles,” said Mark Reuss, president of GM North America. “These latest investments show our commitment to improving fuel economy for buyers of every GM car, truck and crossover and giving them the best possible driving and ownership experience.”
A $235-million spending initiative by GM Canada, less than a year after the country's largest carmaker came close to collapse, has reinforced hopes that the North American auto sector is getting back on track and that Canadian governments will be able to recoup their bailout money some day.
The investment at GM's powertrain plant in St. Catharines, Ont. will secure up to 400 jobs there, as part of the automaker's plans for a new generation of V-8 engines that it says will be more fuel-efficient.
Nearly half of the $890 million in plant improvements announced Tuesday by Detroit-based General Motors Corp. — $400 million — will be spent at an engine plant in Tonawanda, N.Y., near Buffalo, affecting 710 jobs.
Although separated by the Canada-U.S. border, the two plants are within 70 kilometres of each other — an example of how integrated the North American auto manufacturing sector has become.
The next generation small block engine family will have unprecedented fuel efficiency through direct injection and an all-new advanced combustion system design. The new engine family will rely exclusively on aluminum engine blocks, which are lighter and contribute to the improved fuel efficiency. In addition to being E85 ethanol capable, these engines are being designed with the capability to meet increasingly stringent criteria emissions standards expected throughout this decade.
Specifics about the engine capabilities as well as product applications will be shared at a later date.
Since the launch of the new GM last July, the company has announced investments of more than $2.3 billion at 22 facilities in the U.S. and Canada. These investments restored or created more than 9,100 jobs, and they demonstrate a strong commitment to GM’s future and to the United States and Canada.
About General Motors: General Motors, one of the world’s largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 217,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, FAW, GMC, Daewoo, Holden, Opel, Vauxhall and Wuling. GM’s largest national market is the United States, followed by China, Brazil, Germany, the United Kingdom, Canada, and Italy. GM’s OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. More information on the new General Motors can be found at www.gm.com. |
|
Last Updated on Sunday, 02 May 2010 09:36 |
|
|
The GM Announcement - April 27th, 2010 |
|
Written by Big Block
|
|
Thursday, 29 April 2010 10:42 |
|
General Motors (GM) has announced it’ll cut thousands of jobs, close thousands of dealers, and eliminate the Pontiac brand over the coming months. The GM announcement came during a press conference Monday.
The GM Announcement
GM’s announcement indicates up to 8,000 U.S. factory jobs will be cut and 2,600 dealers will be closed by 2010. The Pontiac line of vehicles will become history, allowing GM to instead focus on “four core brands” of Chevrolet, Cadillac, Buick and GMC.
“The revised plan moves up the resolution of Saab, Saturn, and Hummer to the end of 2009, at the latest,” the company says. Thus far, GM is engaged in “talks” about the Saab and Hummer brands, according to the Detroit Free Press — but the Saturn brand has yet to spark interest that could allow it to be built past the end of the year, the paper reports.
The full GM announcement follows.
General Motors (NYSE: GM) today presented an updated Viability Plan that will speed the reinvention of GM’s U.S. operations into a leaner, more customer-focused, and more cost-competitive automaker.
The Viability Plan is included in an exchange offer whereby GM is offering certain bondholders shares of GM common stock and accrued interest in exchange for certain outstanding notes.
Revised Viability Plan goes further and faster
The Viability Plan announced today builds on the February 17 Viability Plan submitted to the U.S. Treasury. The revised Plan accelerates the timeline for a number of important actions and makes deeper cuts in several key areas of GM’s operations, with the objective to make us a leaner, faster, and more customer-focused organization going forward.
Significant changes include:
- A focus on four core brands in the U.S. – Chevrolet, Cadillac, Buick and GMC – with fewer nameplates and a more competitive level of marketing support per brand.
- A more aggressive restructuring of GM’s U.S. dealer organization to better focus dealer resources for improved sales and customer service.
- Improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants.
- Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007.
“We are taking tough but necessary actions that are critical to GM’s long-term viability,” said Fritz Henderson, GM president and CEO. “Our responsibility is clear – to secure GM’s future – and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team.”
Fewer U.S. brands, nameplates, and dealers
As part of the revised Viability Plan and the need to move faster and further, GM in the U.S. will focus its resources on four core brands, Chevrolet, Cadillac, Buick and GMC. The Pontiac brand will be phased out by the end of 2010. GM will offer a total of 34 nameplates in 2010, a reduction of 29% from 48 nameplates in 2008, reflecting both the reduction in brands and continued emphasis on fewer and stronger entries. This four-brand strategy will enable GM to better focus its new product development programs and provide more competitive levels of market support.
The revised plan moves up the resolution of Saab, Saturn, and Hummer to the end of 2009, at the latest. Updates on these brands will be provided as these initiatives progress.
Working with its dealers, GM anticipates reducing its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42%. This is a further reduction of 500 dealers, and four years sooner, than in the February 17 Plan. The goal is to accomplish this reduction in an orderly, cost-effective, and customer-focused way. This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. More details on these initiatives will be provided in May.
Sales volume and market share projections
The Viability Plan anticipates improved financial results despite more conservative U.S. sales volume expectations going forward. The lower volume expectations are the result of managing the business with fewer nameplates and dealers, leaner inventories, and reduced market share. To address the inventory issue, GM on April 23 announced U.S. production schedule reductions of approximately 190,000 vehicles during the second and early third quarters of 2009.
The Viability Plan also reduces GM’s market share projections to adjust for the impact of the brand and dealer consolidation, as well as for the short-term impact of speculation regarding a GM bankruptcy. The plan assumes a 19.5% share in 2009, with share stabilizing in the 18.4 to 18.9% range in subsequent years.
“We have strong new product coming for our four core brands: the Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe,” said Henderson. “A tighter focus by GM and its dealers will help give these products the capital investment, marketing and advertising support they need to be truly successful.”
Lower structural costs, lower breakeven point
The Viability Plan also lowers GMNA’s breakeven volume to a U.S. annual industry volume of 10 million total vehicles, based on the pricing and share assumptions in the plan. This lower breakeven point (at an adjusted EBIT level) better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury in its March 30 viability plan assessment.
GM will lower its breakeven point by cutting its structural costs faster and deeper than had previously been planned:
- Manufacturing: Consistent with the mandate to accelerate restructuring, we plan to reduce the total number of assembly, powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by the end of 2010, a reduction of 28 percent, and to 31 by 2012. This would reflect the planned acceleration of six plant idling/closures from the February 17 plan, and one additional plant idling. Throughout this transition, GM will continue to implement its flexible global manufacturing strategy (GMS), which allows multiple body styles and architectures to be built in one plant. This enables GM to use its capital more efficiently, increase capacity utilization, and respond more quickly to market shifts.
- Employment: U.S. hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34% reduction, and level off at about 38,000 starting in 2011. This further planned reduction of an additional 7,000 to 8,000 employees from the February 17 Plan is primarily the result of the previously discussed operational efficiencies, nameplate reductions, and plant closings. GM also anticipates a further decline in salaried and executive employment as it continues to assess its structure and execute the Viability Plan. More details will be announced as soon as they are finalized with the various stakeholders.
- Labor costs: The Viability Plan assumes a reduction of U.S. hourly labor costs from $7.6 billion in 2008 to $5 billion in 2010, a 34 percent reduction. GM will continue to work with its UAW partners to accomplish this through a reduction in total U.S. hourly employment as well as through modifications in the collective bargaining agreement.
As a result of these and other actions, GMNA’s structural costs are projected to decline 25 percent, from $30.8 billion in 2008 to $23.2 billion in 2010, a further decline of $1.8 billion by 2010 versus the February 17 Plan.
Strengthening GM’s balance sheet
Another key element of GM’s restructuring will be taking the necessary actions to strengthen its balance sheet. GM today took an important step in improving its balance sheet by launching a bond exchange offer for approximately $27 billion of its unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity.
“A stronger balance sheet would free the company to invest in the products and technologies of the future,” Henderson said. “It will also help provide stability and security to our customers, our dealers, our employees, and our suppliers.”
Another important part of improving the balance sheet will be the ongoing discussions with the UAW to modify the terms of the Voluntary Employee Benefit Association (VEBA), and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM’s outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM’s future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions.
In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction.
Throughout the Plan, GM will continue to make significant investment in future products and new technologies, with an investment of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014. Very importantly, development and testing of the Chevy Volt extended-range electric car remains on track for start of production by the end of 2010 and arrival in Chevrolet dealer showrooms soon thereafter.
“The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring,” Henderson said. “We appreciate their support and direction. This stronger, leaner business model will enable GM to keep doing what it does best – provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country’s economy and environment.”
|
|
Last Updated on Sunday, 02 May 2010 09:37 |
|
|
|
|
<< Start < Prev 1 2 3 4 5 6 7 8 Next > End >>
|
|
Page 4 of 8 |
|
Feed Entries 
