General Motors Co. employees are getting as much as $11,000 each in profit sharing in the wake of the company’s record profits in 2015, while top GM executives said the outlook for 2016 remains very promising.
That exceeds last year’s $9,300 enjoyed by UAW workers. However, Mary Barra, GM’s chairman and chief executive officer, tempered expectations telling analysts that GM is confident that the demand vehicles is at a peak and will begin to drop.
“It’s hard to predict a downturn,” she said, adding that GM believes the economic fundamentals are still relatively strong and stable.
Chuck Stevens, GM’s chief financial officer, told analysts that he believes while sales could reach something of a “plateau,” they will remain the mid 17-million range, following the record sales in 2015. The sales forecast is underpinned by the slow, but steady growth of the U.S. economy, he said.
Stevens also noted that credit remains readily available but there are no signs suggesting that consumers have been over extended. In addition, GM is now financing a growing percentage of its sales through its in-house finance unit.
(GM reports record profits of $9.7 billion for 2015. For more, Click Here.)
GM’s operations in China also remain stable and GM expects the Chinese demand for new vehicles to grow by single digits this year, Stevens said.
At the heart of the company, GM North America reported earnings before interest and taxes or EBIT-adjusted of $2.8 billion in the fourth quarter of 2015 compared to $2.2 billion in 2014. Full-year EBIT-adjusted of $11 billion and EBIT-adjusted margin of 10.3% were both records.
The results compared favorably with EBIT-adjusted of $6.6 billion and EBIT-adjusted margin of 6.5% in 2014. Based on GMNA’s 2015 financial performance, the company will pay profit sharing of up to $11,000 to approximately 49,600 eligible GM U.S. hourly employees.
(Click Here for details about Ford’s expectations for Europe.)
“The agreement we have with the UAW will not impede our 10% margins in North America,” Stevens said. “We do have more flexibility.”
He noted the terms of contract will add about $200 million annually to GM’s cost structure but much of the increase will be offset by productivity gains.
Cindy Estrada, the United Auto Workers vice president in charge of the UAW’s GM department, hailed the record profit sharing for GM more than 49,000.
(To see more about GM’s ride-sharing plans, Click Here.)
“UAW members will go home to their families today knowing that their hard work and innovative team work have paid off. Through collective bargaining those UAW members eligible will receive up to $11,000 in GM profit sharing. Together, UAW members are sharing in the quality products and record sales of GM cars and trucks,” she said.