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News > Companies
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GM raises targets, output
No. 1 automaker says it sees stronger-than-expected demand for new vehicles.
February 25, 2002: 8:30 a.m. ET

graphic NEW YORK (CNN/Money) - General Motors Corp. raised its earnings outlook and production plans for the first quarter and for the year, saying the move is a reaction to stronger-than-expected auto sales.

The world's largest automaker said it expects to earn $1.20 a share in the first quarter, excluding the results of its Hughes Electronics unit as well as charges from a restructuring of European operations. The company said its previous guidance called for first-quarter EPS of $1 on that basis.

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GM said it is looking at full-year EPS of $3.50 on that same basis, up from its earlier guidance of $3.

Shares of General Motors (GM: up $1.63 to $54.74, Research, Estimates) gained about 3 percent in midday trading Monday following the announcements.

Analysts and earnings tracker First Call also exclude special items, such as the European restructuring charges, from results, but they include results of Hughes (GMH: Research, Estimates), despite the company's plans to sell the company to EchoStar Communications Corp. (DISH: Research, Estimates) in a deal now undergoing regulatory review. Because of that, the analysts' forecasts are not comparable with the company's latest guidance.

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The consensus forecast of analysts surveyed by First Call is for GM to earn 87 cents a share in the first quarter, up from 50 cents a year earlier, and full-year earnings per share of $2.95, down from $3.23 in 2001.

GM also increased its first-quarter production plans in North America by 20,000 vehicles to 1.34 million. That puts it about 10 percent above production in the first quarter of 2001, when the company was idling plants temporarily and slashing production due to weakening sales and large vehicle inventories.

GM Chief Financial Officer John Devine also gave analysts' the company's internal targets for 2005 earnings per share -- saying that the company hoped improved sales volumes, control of costs, and improved overseas profitability would bring earnings to about $10 per share by that time.

"While it's quite a bit of stretch on cost side, we think it's a reasonable target to aim for," he said. "In fact if we don't deliver this, we probably aren't doing our job."

  graphic OTHER STORIES  
   
  • Ford, Chrysler, GM January sales fall - Feb. 1, 2002
  • General Motors 4Q profit sink 58% - Jan. 16, 2002
  • Hughes 4Q loss widens as revenue gains - Jan. 15, 2002
  • GM raises 4Q, '02 earnings outlook - Jan. 10, 2002
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    GM also filed plans Monday to offer $2.5 billion in convertible debt securities, a move it said will improve the company's financial flexibility. It said it will use proceeds to rebuild its cash position, reduce underfunded pension liability and fund its post-retirement health-care obligations.

    Devine said that the company should see significant savings from the contributions to the pension funds and retiree's health plans, allowing the company to add to earnings per share from the move.

    The company said it believes total U.S. industry sales will come to about 16 million vehicles, up from its earlier 15.5-million vehicle forecast. Company executives said in early February that January sales were strong but that they weren't yet ready to raise their industry forecast in line with some other estimates.

    GM also said it expects to build 605,000 cars and 820,000 trucks in the second quarter, which puts second-quarter production about 4 percent above year-earlier levels. graphic

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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