General Motors said this week it would return cash to shareholders by raising its stock buyback program, while Ford announced it expected to deliver record 2015 pre-tax profit.
General Motors announced this week it would return cash to shareholders by raising its stock buyback program by 80 percent to $9 billion – an increase of $4 billion – and increasing its dividend by 6 percent. The company also raised its 2016 earnings per share forecast to $5.25 and $5.75 per share from a previous 2016 outlook made in October of between $5.00 and $5.50 per share. Chief Executive Officer Mary Barra said the automaker would reduce capital spending as a share of revenue below the current 5 percent to 5.5 percent and the plan should keep GM on track to achieve 9- to 10-percent EBIT-adjusted margin (operating profit before exceptional items) by early next decade.
Barra shared this outlook with the investment community attending the Deutsche Bank 2016 Global Auto Industry Conference in Detroit. Also at the conference, Ford Motor Company said it expected to deliver record 2015 pre-tax profit, excluding special items, and to continue its momentum in 2016 with results that are equal to or higher than 2015. “As we close out 2015, we are benefiting from six consecutive years of consistently strong results, and our performance is allowing us to reward our shareholders,” said Mark Fields, Ford president and CEO. As a result of the company’s performance in 2015, Ford’s Board of Directors declared a first quarter dividend of $0.15 per share and a $1 billion supplemental cash dividend that is equal to $0.25 per share.
Ford said it expected North America to sustain its strong performance in 2016 with an operating margin of 9.5 percent or higher. The company foresees Europe, Middle East & Africa, and Asia Pacific to all be profitable in 2016, with Europe’s and Asia Pacific’s results improving over 2015 and Middle East & Africa’s results being about equal to or higher than last year.