Economy News – Follow-up
General Motors has announced a planned 25% increase in its quarterly profit distributions, raising the payment to 15 cents per share. This adjustment aligns its distributions with those of competitor Ford Motor Company.
The enhanced profit distributions are set to take effect with the company’s next announcement, which is scheduled for April.
Under a $6 billion share repurchase program, GM anticipates completing $2 billion in buybacks by the second quarter, as reported.
“The dedication of the General Motors team remains robust across the three pillars of our capital allocation strategy: reinvesting in the business for profitable growth, maintaining a strong investment-grade balance sheet, and returning capital to our shareholders,” stated Marie Para, CEO of General Motors.
Return of Capital to Shareholders
In a prior announcement, Bara indicated a commitment to returning capital to shareholders during this fiscal year, contingent upon Board approval. In 2023, GM revealed a $16 billion repurchase program which has enabled the retirement of over a billion shares from circulation.
Despite these initiatives and consistently exceeding Wall Street expectations with strong quarterly results, GM’s stock has declined by over 12% this year.
Analysts on Wall Street attribute this downturn to various factors, including stagnant auto industry sales, uncertainties regarding tariff regulations, and a lack of growth opportunities.
General Motors disclosed that the total number of shares repurchased under the rapid buyback plan for $2 billion will be influenced by the average daily trading price of its common shares throughout the program duration. The buyback initiative is being managed by JPMorgan and Barclays.
In contrast to the accelerated buyback program, GM retains $4.3 billion of its authorized capacity for future repurchases, allowing for additional shares to be bought as opportunities arise, including $300 million remaining from its previous $6 billion repurchase program initiated in June.
Shares Traded
By the close of the previous year, GM had successfully reduced its outstanding shares to below one billion, fulfilling a goal set earlier by Paul Jacobson, the company’s Chief Financial Officer.
“We are confident in our action plan; our balance sheet remains strong, and we will be swift in responding to changes in public policy,” Jacobson remarked. “The share repurchase authorization approved by our Board firmly aligns with our capital allocation policy.”
For the year 2025, General Motors projects net income attributed to shareholders in the range of $11.2 billion to $12.5 billion, translating to approximately $11 to $12 per share. Adjusted earnings before interest and taxes (EBIT) are estimated between $13.7 billion and $15.7 billion, or about $11 to $12 per share on average, with free cash flows in the automotive sector projected to be between $11 billion and $13 billion.
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