GM expects 2013 operating profit to rise modestly
DETROIT (Reuters) - General Motors Co expects its operating profit to rise "modestly" this year with improved results anticipated in each region because of new vehicles and greater demand in the United States and China.
The U.S. automaker said on Tuesday it expects global market share growth in 2013 and improved vehicle pricing and operating profit margins, Chief Financial Officer Dan Ammann said.
"We're very much focused on this huge wall of new product that we have ready to bring into the market place," he said on a conference call with reporters. "The real focus for us this year is on execution of these launches."
"As a result of an expectation of some overall industry growth around the world, and based on this product portfolio, we do expect to have an improvement in profitability for the company in 2013," he added.
Analysts, on average, expect GM's 2013 profit to be $3.89 a share, up from an estimated $3.27 a share for 2012, according to Thomson Reuters I/B/E/S.
An analyst said the GM's outlook was weaker than Wall Street had expected, and that analysts' estimates for 2013 would have to come down.
GM reiterated that its U.S. product lineup would be 70 percent refreshed over 2012 and 2013.
The Detroit automaker expects U.S. industry sales to increase about 5 percent, and it expects to increase its market share modestly while boosting vehicle pricing. GM also is targeting 10-percent operating profit margins, up from about 8 percent now.
In China in 2011, GM and its joint venture partners, including SAIC Motor, began rolling out more than 60 new or upgraded models that will be introduced to that market through 2015.
Industry sales in the international region, which includes China, are expected to rise about 5 percent this year, along with a moderate improvement in pricing. GM's goal is to improve margins in the region and continue profitable growth in China.
GM officials said in China they are seeing pressure on profit margins and they blamed an industry drop in pricing of about 5 percent. GM international CFO Tim Stonesifer said GM's pricing is down less than that.
He also cited sales growth in smaller cities in China, which are lower-margin vehicles, as well as fewer government tax incentives. To improve margins in China, he said GM needs to continue investing in Cadillac and rolling out its OnStar communications, in-car safety system, both of which would boost profit margins.
GM reaffirmed that it expects the European auto market to contract about 4 percent and show pricing pressure this year, although the company expects a modest share gain. It has said it is targeting break-even results in the region by mid-decade.
Chief Executive Dan Akerson said last week that GM expects Europe to weaken further in 2013 and Germany, maybe slipping into recession.
In South America, GM expects moderate industry growth and a slight market share increase for the company in 2013. The company is targeting mid-single digit profit margins.
Ammann said GM's "fortress balance sheet" would allow the Detroit company to invest in vehicle development so it can sustain its profits. The company reiterated it would invest $8 billion annually.
(Reporting by Ben Klayman in Detroit; Editing by Dan Grebler and Carol Bishopric)