General Motors has said it expects earnings per share to leap in 2017 , exceeding what is expected to be a record profit for 2016, as the company launches high-margin crossovers in North America and grows sales in China.
The company also said it would expand a stock-buyback program and cut costs more aggressively than previously announced.
The outlook would mean a third consecutive increase in GM’s profits in 2017, even as analysts project a slight decline in U.S. auto sales and Ford Motor Co. warns of lower earnings in the year ahead.
GM said the results will allow it to buy back $5 billion more of its stock, expanding a repurchase program started in 2015 to $14 billion. Shares in GM rose percent to close the day at $37.35.
Separately, Standard & Poor’s lifted GM’s credit rating one level Tuesday to BBB, the second step above junk. GM should be able to maintain strong cash flow and steady profitability this year and next even as global auto demand slows, Nishit Madlani, an S&P credit analyst, wrote in a statement.
CEO Mary Barra, speaking to analysts at a conference hosted by Deutsche Bank, said GM has increased its target for annual cost reductions by $1 billion, to $6.5 billion through 2018. The company already has achieved cuts totaling $4 billion since 2014.
“We’ve generated consistently strong results, and we’ve done that for the last several years while delivering great vehicles and establishing a leadership position in defining the future of personal mobility,” Barra said. “Going forward, we will stay focused on executing our strategic plan and generating profitable growth that is needed to create long-term value for our shareholders.”
GM said it now expects to post adjusted earnings of nearly $6 per share for 2016 and between $6 and $6.50 per share this year.
Both figures would top GM’s current record profit since its 2009 bankruptcy of $5.02 a share in 2015. That translated to total net income of $9.7 billion, Automotive News reports.