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FORD MOTOR COMPANY

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GM posts record profit in fourth quarter and 2015, but shares skid

02/03/2016 | 04:44pm EDT
General Motors Chairman and CEO Mary Barra speaks during a keynote address at the 2016 CES trade show in Las Vegas

DETROIT (Reuters) - General Motors Co (>> General Motors Company) reported record quarterly and annual profits on Wednesday and promised 2016 will be even better, but unimpressed investors dumped the automaker's shares.

DETROIT (Reuters) - General Motors Co (>> General Motors Company) reported record quarterly and annual profits on Wednesday and promised 2016 will be even better, but unimpressed investors dumped the automaker's shares.

The disconnect highlights the challenges facing GM, Ford  (>> Ford Motor Company) and Fiat Chrysler <FCHA.MI> (>> Fiat Chrysler Automobiles NV).

U.S. sales and profits are strong, the Chinese auto market has not fallen off a cliff, and European vehicle demand is recovering. Yet shares in the Detroit automakers are not getting any respect, increasing pressure on executives to boost dividends and share buybacks even as the costs of new technology and emissions regulations rise.

GM shares fell as much as 5 percent, even as Chief Executive Officer Mary Barra and Chief Financial Officer Chuck Stevens told investors on a conference call that any downturn in U.S. auto sales is still several years away. The automaker's shares closed Wednesday at $28.92, down 2.5 percent for the day and almost 13 percent for the year.

"The bears argue the U.S. auto industry has peaked and is ready to roll over," Stevens said on the call. GM is positioned to stay profitable even if U.S. car and truck sales fall to 10 million to 11 million vehicles from the current rate of over 17 million vehicles a year, he said.

Efraim Levy, an S&P Capital equity analyst, said while he did not agree, he understood the bears who fear U.S. auto sales will peak in 2016 and that "people are afraid that we're going to have a recession or some other drop-off in sales, and that that's going to hurt margins."

Levy sees any drop-off as limited and rated the stock a "strong buy."

Detroit automakers have a long record of losing money when the economy slumps. GM and the former Chrysler Group survived the last recession with the help of federally funded bankruptcies.

Barra and Stevens said GM is a different company now. The automaker expects to cut operating costs by $5.5 billion by 2018, and return $16 billion to shareholders in dividends and share buybacks over that span.

At the same time, GM is investing to fend off challenges from would-be disruptors. Barra outlined how GM plans to use its recently acquired stake in ride hailing service Lyft to pave the way for the introduction of self-driving vehicles.

"We will continue to invest in game changers," Barra said.

GM earlier Wednesday reported record net income of $9.7 billion for 2015.

Profit before interest, taxes and one-time items was $2.8 billion, a fourth-quarter record and ahead of analysts' expectations.

GM affirmed a forecast to increase 2016 earnings per share, excluding one-time items, to $5.25 to $5.75 from $5.02 a share in 2015.

GM generated nearly all of its fourth-quarter profits in North America.

(Reporting by Joe White and Bernie Woodall in Detroit; Editing by Jeffrey Benkoe and Bill Rigby)

By Bernie Woodall and Joseph White


ę Reuters 2016
Stocks mentioned in the article
ChangeLast1st jan.
FORD MOTOR COMPANY -1.23% 15.809 Delayed Quote.82.03%
GENERAL MOTORS COMPANY -0.64% 57.4 Delayed Quote.38.71%
RISE, INC. 0.00% 26 End-of-day quote.8.33%
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Financials (USD)
Sales 2021 127 B - -
Net income 2021 4 922 M - -
Net cash 2021 5 501 M - -
P/E ratio 2021 12,5x
Yield 2021 0,22%
Capitalization 63 916 M 63 916 M -
EV / Sales 2021 0,46x
EV / Sales 2022 0,35x
Nbr of Employees 186 000
Free-Float 98,0%
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Ford Motor Company Technical Analysis Chart | F | US3453708600 | MarketScreener
Technical analysis trends FORD MOTOR COMPANY
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 20
Last Close Price 16,00 $
Average target price 16,77 $
Spread / Average Target 4,80%
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Managers and Directors
James D. Farley President, Chief Executive Officer & Director
John T. Lawler Chief Financial Officer & Vice President
William Clay Ford Executive Chairman
Douglas Field Chief Advanced Technology Officer
Michael R. Amend Chief Digital & Information Officer
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