GM shares tumble after margin outlook disappoints
DETROIT (Reuters) - Shares of General Motors Co (GM.N) tumbled more than 5 percent on Wednesday after the largest U.S. automaker issued a profit outlook for the year that fell short of analyst expectations.
In a conference call on Tuesday night, GM Chief Financial Officer Dan Ammann predicted that operating profit would rise "modestly" this year.
GM expects North American margins this year to be unchanged from 2012 levels due to higher costs associated with vehicle launches this year as well as higher advertising costs and other expenses.
The outlook disappointed investors, some of whom were expecting margins to grow about one-half a percent, RBC Capital Markets Joseph Spak said in a research note.
Some analysts expected GM's margins in North America to be competitive with its smaller U.S. rival Ford Motor Co (F.N), which reported 12 percent margins in the region during the third quarter.
"We believe this was below market expectations (and GS) which was anticipating some convergence between GM and Ford margins in NA for this year," Goldman Sachs analyst Patrick Archambault said in a note.
GM said its profitability will likely be down in the first half of the year, but would jump in the second half on the strength of its new models, especially the 2014 Chevrolet Silverado and Colorado trucks.
Analysts, on average, expected 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.
GM shares fell as much as 5.8 percent to $28.83 on the New York Stock Exchange. The stock was down 5.1 percent to $29.02 by late morning, while the broader market was mixed. Ford shares were down more than 1 percent to $14.11.
(Reporting by Deepa Seetharaman; Editing by Jeffrey Benkoe)
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