Thursday, January 18, 2007

GM outlines 2007 financial objectives

Thursday, January 11, 2007
GM outlines 2007 financial objectives
John D. Stoll / Dow Jones

DETROIT -- General Motors Corp. executives today will tout the momentum of their restructuring efforts and provide a glimpse of financial objectives for 2007 during a two-hour presentation to analysts.

GM's top brass, including CEO Rick Wagoner, will focus on the company's drive to continue increasing revenue after a 5 percent gain through three quarters of 2006, its expectations for a rise in its U.S. retail sales, and its ongoing commitment to boost sales in markets outside the United States.

GM quit giving formal earnings guidance and is not expected to provide an extensive 2007 cash-flow forecast on Thursday. The company's cash position, which has been a source of concern because of heavy outflows in recent quarters, might have risen to a healthy $30 billion as of the end of 2006, thanks to proceeds from the November sale of control in the General Motors Acceptance Corp. lending arm.

While formal guidance will be absent, GM Chief Financial Officer Fritz Henderson said the auto maker will be "transparent on what the drivers are for profitability." He said that the company faces too many uncertainties to provide formal guidance. "It's much more about showing consistent, improved performance," he added.

GM will give more clarity on cash flow fundamentals in coming months, Henderson said.

The auto maker posted a net loss of nearly $1 billion over the first nine months of 2006 and will report full-year earnings Jan. 30. The performance in the first three quarters represented a $3.5 billion improvement over the same period in 2005, when GM went on to lose $10.6 billion for the year.

GM expects business fundamentals to improve in 2007, with 40 percent of its retail volume in the United States coming from what are considered new products. Retail sales exclude those to fleet customers, such as rental car firms and government or corporate accounts.

GM is under increased pressure to improve its financial performance, in particular because the company is hitting the sweet spot of its product cycle, many analysts say.

GM has promised to sell at least 3 million vehicles at the retail level in the U.S. this year, representing about 23 percent of the retail market.

© Copyright 2007 The Detroit News. All rights reserved.


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