GM increases earnings estimates and production schedule

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Posted 9:16AM on Monday, February 25, 2002

DETROIT - General Motors Corp. has raised its earnings estimates for the first quarter and calendar-year 2002, and is boosting its planned vehicle production. The world's largest automaker made the announcement on Monday, citing better-than-expected industry sales in the United States and strong retail sales of GM vehicles. GM's outlook for first quarter earnings per share is now $1.20, excluding Hughes and any special charge related to GM's restructuring of its European operations. Previously, GM's estimate for the first quarter, excluding Hughes and any European restructuring charge, was $1 per share. GM's revised estimate for calendar-year 2002 is now $3.50 per share, excluding Hughes and any European restructuring charge. The increase of 50 cents per share from the previous estimate is mostly attributable to expected increases in production volume to meet better-than-expected retail vehicle demand in the United States. The consensus forecast by analysts surveyed by Thomson Financial/First Call was for earnings of 87 cents a share in the first quarter and $2.95 a share for the year. GM said it was optimistic about the U.S. industry outlook and expected total U.S. industry sales of approximately 16 million vehicles for the year. As a result of the stronger industry sales outlook and GM's performance in the retail market, GM also said Monday that it was increasing its first quarter North American production estimate by 20,000 vehicles, to 1.34 million units. The revised estimate was 10 percent above last year's first quarter production of 1.214 million vehicles. The revised outlook came as GM is taking steps to strengthen its balance sheet by $10 billion through a combination of improved cash flow, proceeds from its proposed sale of Hughes Electronics and public securities offerings, GM chief financial officer John Devine said. "Our revised expectations reflect the increased optimism we have about our near-term performance, and the confidence we have about the future," Devine said in a statement. "We can strengthen the balance sheet by capitalizing on the momentum we're creating in market share, quality, productivity, and new product offerings." Devine said the automaker could generate $10 per share in earnings by the middle of the decade. GM reported last month that it earned $255 million in the fourth quarter, or 60 cents a share, down from $609 million, or $1.15 a share, a year earlier. For 2001, GM earned $1.48 billion, or $3.23 a share, down from $4.97 billion, or $8.58 a share, a year earlier. Revenue for the year fell to $177.27 billion from $183.29 billion in 2000.