GM Business Objectives for 2004
January 09 2004 - 1:01AM
UK Regulatory
GM Ends 2003 On a Strong Note, Sets Business Objectives for 2004
- Closes 2003 with stronger balance sheet, fully funded U.S. pensions,
record GMAC results, strong U.S. sales performance
- Targets 2004 earnings per share of $6.00 - $6.50
- Expects $5.0 billion operating cash flow in 2004
- Plans to grow market share in all regions
DETROIT, Jan. 9 -- General Motors Corp. (NYSE: GM) today
unveiled its business objectives for 2004 at a meeting of the Automotive
Analysts of New York, saying that a key competitive advantage is the company's
ongoing drive to leverage its global capabilities to meet local market needs.
"The winners in tomorrow's global auto industry will be those companies
that best combine the efficiencies of global scale with a superb focus on
local markets," said GM Chairman and Chief Executive Officer Rick Wagoner.
"And I like GM's position."
Wagoner said GM ended 2003 with a significantly stronger balance sheet as
the company doubled its cash generation target, restored its U.S. hourly and
salaried pension plans to a fully funded position, and posted record results
at General Motors Acceptance Corporation (GMAC).
GM also posted strong vehicle sales in the U.S. in the second half of the
year, reflecting better economic conditions and greater availability of
several important new products. For the second half of 2003, GM's U.S. market
share was 28.7 percent, and industry volume was running at about 17.5 million
units.
GM is scheduled to report 2003 financial results on January 20. However,
the company said that the current analyst consensus of approximately $1.22
earnings per share for the fourth quarter of 2003 is a reasonable estimate.
GM Vice Chairman and Chief Financial Officer John Devine said GM expects
to grow market share in all four GM automotive regions and to improve
automotive profitability in 2004. He said the company expects to earn $6.00
to $6.50 per share of GM common stock in 2004, excluding any special items and
at current dilution levels. The dilution calculation may be affected by the
Series C Convertible Senior Debentures due in 2033 and issued by GM in July of
2003. In addition, GM expects to generate operating cash flow of $5.0
billion.
Devine also reiterated GM's goal of attaining earnings of $10 per share by
mid-decade.
"In order to achieve this aggressive target, we will continue to focus on
enhancing revenue and reducing costs. More specifically, this will require
attaining a minimum net margin of 2.5 percent in North America and 1 percent
in Europe. We must also achieve moderate profitability in Latin America and
continued growth in the Asia Pacific region," Devine said. "Getting to $10
per share will be very challenging, but we plan to get it done."
GM expects record global industry sales of about 60 million vehicles in
2004, up more than 3 percent over 2003. The growth is expected to be led by
strength in China and other emerging markets, with a gradual recovery in South
America and continued improvement in the U.S. GM estimates that 2004 industry
sales will be up 2 percent, to approximately 17.3 million units in the U.S.;
up 1 percent, to approximately 19.6 million units in Europe; and up 3 percent,
to approximately 3.6 million units in the LAAM region. The strongest growth
is anticipated in Asia Pacific, where the industry is expected to reach
approximately 17 million units -- a gain of about 9 percent.
GM's business objectives by region include 2004 net income in North
America of approximately $1.0 to $1.4 billion; a range of break-even to income
of about $100 million in Europe; improved performance in the LAAM region with
narrowed losses of about $100 million to $200 million in 2004; and income of
$700 million to $800 million in the Asia Pacific operations.
GM will continue its worldwide product offensive with plans for total
capital expenditures of approximately $7 billion in 2004. Net material cost
reduction for GM North America is targeted at greater than 3.5 percent, and at
greater than 3.0 percent for GM Europe. In addition, GM expects to reduce
structural costs by $500 million in 2004.
GMAC Chairman and President Eric Feldstein said GMAC expects to earn at
least $2 billion in 2004, which would be its second-best year -- surpassed
only by 2003 results. Finance operations are expected to earn slightly less
in 2004 as a result of lower net interest margins.
Mortgage profitability is expected to decline on lower mortgage industry
volume. Insurance operations are slated to improve on higher underwriting
income and the appreciation of the unit's investment portfolio. In addition,
GMAC is planning to remit a dividend to GM for the third consecutive year.
GMAC paid a $1 billion dividend to GM during the fourth quarter of 2003.
General Motors begins 2004 with its U.S. hourly and salaried pension plans
fully funded -- a result of pension plan contributions totaling $18.5 billion
in 2003, combined with asset returns of approximately 22 percent for calendar
year 2003. The fully funded status reflects a discount rate of 6.0 percent,
down from the 6.75 percent rate used previously. GM will maintain its long-
term expected asset return assumption of 9 percent. In 2004, GM expects
pretax pension expense and related interest expense to total about $2.4
billion, down from $3.1 billion in 2003.
Earlier this week, GM contributed $2.4 billion in cash to its Voluntary
Employees' Beneficiary Association (VEBA) Trust used to fund GM's post-
retirement health care obligations. This contribution brings the total assets
in the VEBA Trust to approximately $12.4 billion. GM's 2004 post-retirement
health care expense is expected to be $4.6 billion, up from $4.3 billion in
2003.
"The escalating cost of health care is a growing competitive disadvantage
for U.S. businesses at a time when global competition is increasing," Devine
said. "Working with the business community and government to make the health
care system more accountable and affordable will be a priority for GM in the
coming year."
In this press release and related comments by General Motors management,
our use of the words "expect," "anticipate," "estimate," "project,"
"forecast," "outlook," "target," "objective," "plan," "goal," "pursue" and
similar expressions is intended to identify forward looking statements. While
these statements represent our current judgment on what the future may hold,
and we believe these judgments are reasonable, actual results may differ
materially due to numerous important factors that are described in GM's most
recent report on SEC Form 10-K (at page II-18) which may be revised or
supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors
include, among others, the following: changes in economic conditions, currency
exchange rates or political stability; shortages of fuel, labor strikes or
work stoppages; market acceptance of the corporation's new products;
significant changes in the competitive environment; changes in laws,
regulations and tax rates; and, the ability of the corporation to achieve
reductions in cost and employment levels to realize production efficiencies
and implement capital expenditures at levels and times planned by management.
SOURCE General Motors Corporation
-0- 01/09/2004 P
/NOTE TO EDITORS: General Motors will provide audio and webcast of its
presentations to the Automotive Analysts of New York today, January 8, 2004,
from approximately 2:15 p.m. to 5:15 p.m. Eastern Time.
Audio access to the presentations will be available through a live
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approximately 2:00 p.m. Eastern Time (ET). To access the conference call,
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January 8 until 6:15 p.m. ET on January 9. To access the taped replay, dial
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enter reservation #21173208.
The presentations will be available live via a hot link in GM Media Online
at http://media.gm.com , or directly at http://investor.gm.com under the
"Events and Presentations" section. Presentation materials will also be
retained for a limited time under "Recent Presentations" in the Events and
Presentations section.
/CONTACT: Toni Simonetti, +1-212-418-6380 office, +1-917-822-3392 cell,
toni.simonetti@gm.com , or Sheri Woodruff, +1-212-418-6389 office,
+1-917-499-0685 cell, sheri.woodruff@gm.com , both of General Motors
Corporation/
/Web site: http://media.gm.com
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(GM)
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