By Ben Klayman and Joseph White
DETROIT (Reuters) – General Motors Co (N:) on Wednesday forecast flat profits for 2020 and reported a better than expected fourth quarter result as it kicked off a new effort to win over investors stampeding into shares of electric car rival Tesla Inc (O:).
GM said it expects earnings per share for 2020 in a range from $5.75 to $6.25, excluding one time items, taxes and interest. Analysts are expecting GM to earn $6.23 this year on a comparable basis, according to IBES data from Refinitiv.
The automaker’s shares were up slightly in pre-market trading.
GM’s fourth quarter profits took a $3.6 billion hit from a 40-day United Auto Workers strike that shut down the automaker’s profitable U.S. operations. Profits from its operations in China also fell.
The company said pre-tax profits were 5 cents a share for the latest quarter excluding certain restructuring costs, down from $1.43 a year earlier. Analysts had forecast pre-tax income of a penny a share for the latest quarter.
Including restructuring costs, GM had a fourth quarter net loss of $194 million, or 16 cents a share.
Revenue in the quarter fell nearly 20% to $30.8 billion.
On Tuesday, rival Ford Motor Co (N:) delivered a weaker-than-expected 2020 forecast, warning of higher warranty costs, lower profits at its credit arm and continued investments in future technology such as self-driving cars, sending shares sliding.
GM said income from its joint ventures in China fell to $200 million in the fourth quarter from $300 million a year earlier, as wholesale vehicle deliveries fell by 20%.
The Detroit company said “slower adoption of new fuel-efficient technology” by Chinese customers hit fourth quarter results from the world’s largest auto market. The company is backtracking from an effort to sell vehicles with three-cylinder engines in China, and will offer more four-cylinders.
GM Chief Financial Officer Dhivya Suryadevara said Wednesday the automaker had “people working around the clock here to mitigate the impact” of disruptions to production and parts supply from China’s deadly coronavirus outbreak. GM will make decisions to restart idled operations in China “plant by plant,” Suryadevara said.
But even before the virus outbreak, GM expected the Chinese market to be volatile this year. China’s auto market is maturing, Suryadevara said, which means more competitive pressure on prices and slower growth than in the past.
“We are bullish on the Chinese industry and our position in China long term,” she told reporters ahead of presentations to analysts.
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