GM CEO predicts return to profit this year

[MTLskyline]

GM CEO predicts return to profit this year

 

Nicolas Van Praet, Financial Post

Published: Wednesday, January 06, 2010

 

Ed Whitacre said Wednesday that GM is on track to restore positive earnings and pay back all its loans to the U.S., Canadian and Ontario governments.

 

General Motors Co.'s chairman and chief executive predicts the automaker will be profitable on a net-income basis this year and put behind it five years of annual losses. The builder of Chevrolet trucks and Buick sedans last made money in 2004.

 

Ed Whitacre, who took over the CEO duties after GM's board fired Fritz Henderson in December, said Wednesday that while GM has some major reputational issues to overcome with both U.S. federal lawmakers and car buyers, it is on track to restore positive earnings and pay back all its loans to the U.S., Canadian and Ontario governments.

 

Speaking in Detroit during a small roundtable discussion with local reporters, Mr. Whitacre revealed that at one point during its bankruptcy restructuring last summer, GM considered changing its name to gain a fresh start. It is no longer considering a name change, he said.

 

"We're after profitability first and that's what we're focused on," Mr. Whitacre said. "From that will flow everything else."

 

Asked if GM would be in the black in 2010, the chief executive said, "My prediction is we will be ... I'd like to make positive net income. This business has been through a great deal. It's an unsettled economy and there's a lot going on. But certainly we're aimed at profitability quickly."

 

GM has closed plants, laid off thousands of workers and cut US$40-billion in obligations over the past year in a major drive to reinvent itself. The company is scaling back to four core brands including Chevrolet as it discontinues Pontiac and Saturn and tries to sell Hummer and Saab.

 

Now its task is not only to win new customers. It's to convince buyers loyal to its discontinued brands to consider the marques it's sticking with. "We have to sell more stuff," Mr. Whitacre said simply.

 

That remains a huge challenge. Although its sales are growing internationally, GM lost more market share in its U.S. home market to Toyota Motor Corp. and Ford Motor Co., last month. Toyota also outsold GM on a retail basis, meaning sales to individuals and not commercial customers.

 

GM vehicle sales dropped 5.7% in the United States from the same month a year ago. Its domestic market share for 2009 fell to 19.9% from 22.3%, according to research by Autodata Corp. In Canada, its share fell to 17.2% from 21.7%, research by DesRosiers Automotive Consultants shows.

 

By comparison, Ford and Toyota gained share last year in both countries.

 

"Consumer sentiment is really across the board" towards GM, said Rebecca Lindland, an analyst at IHS Global Insight in Lexington, Mass. "It's very difficult to anticipate how people are really going to respond to the company in 2010."

 

Mr. Whitacre said he expects "hundreds" of GM dealers in the United States whose franchise agreements were terminated by the automaker for poor performance will be reinstated under legislation approved by Congress. A search for a new chief executive officer to replace Mr. Henderson continues and a date for an initial public offering has not been decided, he said. GM's board of directors will meet next week for the first time since November.

 

The automaker exited a 40-day quick-trip bankruptcy in July as a company majority owned by U.S. and Canadian taxpayers. Ottawa and Queen's Park agreed to lend GM US$9.5-billion in exchange for 12% of its common shares and US$1.7-billion in debt and preferred stock.

 

GM's total debt at the end of the third quarter stood at US$17-billion. That included US$6.7-billion in loans to the U.S. Treasury, US$1.4-billion in loans from the federal and Ontario governments, and US$1.3-billion in loans to the German state. It started paying back the state loans last month.

 

nvanpraet@nationalpost.com

http://www.financialpost.com/story.html?id=2413317

[Cataclaw]

B-b-but... i thought Big Government was just meddling in people's lives again! Big Government can't do anything right! You mean something good will come out of this? B-b-but... not possible!

 

 

 

 

[cjb]

Gm est en train de devenir chinoise. Ça va devenir son principal marché d'ici quelques années.

 

Ils devraient fermer leurs usines américaines et ouvrir en Chine, ça augmenterait leurs profits ( si c'est ça leur objectif!).

[MTLskyline]

B-b-but... i thought Big Government was just meddling in people's lives again! Big Government can't do anything right! You mean something good will come out of this? B-b-but... not possible!

 

 

 

 

 

Well technically big government isn't running GM. Yes, they meddled, but they had the right to as they bought GM. Fortunatley GM will pay them back, and this situation won't last long.

 

Considering the heavy subsidies that the auto industry gets in Japan, I suppose it's fair.