GM CEO Says Shareholder Dividend Unlikely This Year
General Motors Co. (GM) Chief Executive Officer Dan Akerson said the automaker doesn’t plan to pay a dividend in 2013.
“I don’t think that’s going to happen this year,” Akerson said today, referring to the dividend, during an interview on Bloomberg Radio’s “A Closer Look With Arthur Levitt,” scheduled to air in September.
The U.S. invested $49.5 billion in GM, the biggest piece of an industry bailout that became a centerpiece in the first term of President Barack Obama. The automaker spent $5.5 billion in December to buy back 200 million of its shares from the U.S. Treasury. The U.S. government said at the time it would sell its remaining GM stake in 12 to 15 months.
“We hope the government will have sold their shares hopefully in the next probably three to six months, maybe a little longer,” Akerson said. “At that point in time, we’ll revisit our capital distribution expectations.”
Ford Motor Co. (F), the second-biggest U.S. automaker, resumed paying a dividend last year. Akerson reiterated that GM’s top priority for cash is to reinvest in new cars and trucks.
“One of our strategic goals is to always have a fortress balance sheet and in doing so we can invest in both up and down economic cycles,” Akerson said. “We have such good cash flow post exit from bankruptcy that our primary goal is to continue to develop great products.”
GM said today the United Auto Workers Retiree Medical Benefits Trust will sell $171 million worth of warrants to purchase GM common shares. The trust is the second-largest GM shareholder behind the U.S., with 140.2 million shares, according to data compiled by Bloomberg. GM won’t receive any proceeds from the offering.
Canada’s government has begun a search for investment banks to sell its stake, a person familiar with the matter said last week.
GM is poised for growth as it introduces 18 new vehicles in the U.S. this year, transforming its lineup into one of the industry’s newest from oldest.
Goldman Sachs Group Inc. last month replaced Ford with GM on its Americas Conviction Buy list and projected that the largest U.S. automaker’s shares may rise to $45 in the next year.
GM slid 1.3 percent to $35.48 at the close in New York. The shares have gained 23 percent this year, outstripping the Standard & Poor’s 500 Index, which rose 19 percent.
Patrick Archambault, a New York-based auto analyst for Goldman Sachs, said GM will earn higher profit margins because of its Silverado and Sierra pickups and that the automaker may pay a dividend by the end of the year.
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