Number 1 U.S. automaker, General Motors Company (GM - NYSE), announced on Thursday that the company is targeting an increase in earnings per share to between $5 and $5.50 per share before items, for 2015. During 2014 before items, GM earned $3.05 per share. The Detroit-based automaker reported a 12% rise in U.S. September sales.
For the year, GM said it will have revenue of $155 billion, global margins of 6.8% and a 24% return on invested capital. With operating efficiencies in manufacturing, administration and purchasing paying for investments in technology and brand development, the automaker reportedly will save about $5.5 billion in the next three years. Through 2018, savings will "more than offset" the technology and brand investments, GM said. By 2020, GM expects $9 billion to $10 billion of annual free cash flow.
Mark Reuss, GM 's global product chief said, materials GM uses for its vehicles will result in some $2 billion in savings.
GM has shown a 4.2% increase in the U.S. market through September. The automaker is on track for 2015 U.S. car sales of more than 17 million which is helped by the improving U.S. economy and rapid jobs growth.
With improving margins, strong brands, new markets for high-tech vehicles and prospects for stronger profits in coming years, GM said its recovery is gathering momentum.
In Milford, Michigan at GM's annual presentation to investors, the company said its pre-tax global margins target is 9% to 10% by "early next decade."
Stronger profit margins in North America and China, along with operating efficiencies and share buybacks should result in GM increasing returns to investors.
Global GM sales are expected to rise by 39% from new or refreshed vehicles - up from 26% for 2015 so far. The share of those new vehicles will be 40% of its total sales in 2017, 31% in 2018 and 40% for both 2019 and 2020.
Industry growth for GM in China is expected from 3% to 5% each year from 2014 to 2020. The recent drop in GM shares is a result of the drop in China sales which are threatened by a general weakening of the world's top auto market and #2 economy.
During the early part of 2016, GM plans to launch a citywide car sharing service in the U.S., expanding efforts to compete for revenue from consumers who want to pay for using cars instead of owning them.
Contributed by Millennium Traders