NEW YORK (CNN/Money) - General Motors Corp. warned that it will see a sharp drop in earnings in 2005, possibly well below Wall Street expectations, as company executives said health care costs would pose problems for its bottom line.

The world's largest automaker said its target is to earn between $4.00 and $5.00 a share in 2005. Analysts surveyed by earnings tracker First Call expect the company to earn $4.78 a share this year, with a range of EPS estimates from $3.60 to $5.75.

GM (Research) is expected to post full-year 2004 EPS of $6.31, excluding special items, when it reports results next week, up from $5.62 a share it earned on that basis in 2003.

The company said it should be able to hit its 2004 earnings guidance of between $6.00 to $6.50 per share, excluding special items. Analysts estimates now range from $6.00 to $6.55 for the just completed year.

"We will achieve our 2004 earnings objectives despite a tough competitive environment," said a statement from GM Chief Financial Officer John Devine.

The company lost market share in its core U.S. market in 2004, but it gained share in its three other regions. It also saw strong results from its financial services unit, record automotive profitability in the Asia Pacific region helped by strong growth in sales in China, and a return to profitability in the Latin America/Africa/Mid-East region.

In early 2002, the company set the target of annual EPS of $10 by the "middle of the decade." It didn't completely back off that target, just pushed back what it now considers "middle of the decade." Devine said that target remains GM's goal. He said it could be achieved as early as 2007 as a result of a strengthening product portfolio in North America, improved performance in Europe, and an expected strengthening of the market in China.

But healthcare costs have been a mounting problem for GM and the other two U.S. automakers, Ford Motor Co. (Research) and Chrysler Group, the North American unit of DaimlerChrysler (Research). Some analysts estimate the traditional Big Three pay almost $2,000 per vehicle more than their Asian competitors do to build cars at their competing North American plants.

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GM has a U.S. hourly work force with an average age of 50. That's a key factor in the higher insurance costs, even though the pay and benefit packages are similar at GM and Asian competitors' North American plants. The younger age of the workers at the newer Asian plants results in lower premiums. The large number of retirees and their family members who have health care benefits provided by GM is another rising cost for GM. The Asian automakers have relatively few U.S. retirees.

GM was set to give more details later Thursday about its financial outlook to analysts gathered in Detroit this week for the start of the annual North American International Auto Show.

Shares of GM, a component of the Dow Jones industrial average, lost about 2 percent of their value following the 3 p.m. ET announcement.