Expressing bullishness about its future, General Motors Corp. yesterday predicted hefty gains in profits for the first quarter and all of 2002. At the same time, it said, it would gear up production to meet better-than-expected U.S. sales.
The world's largest automaker, which fared considerably better than its domestic rivals during the fourth quarter, upped its estimate for first-quarter earnings by 20 percent, to $1.20 a share.
For the full year, GM raised its prediction on net income from $3 a share to $3.50 a share.
The estimates exclude GM's money-losing Hughes Electronics Corp., which is being sold.
"Our revised expectations reflect the increased optimism we have about our near-term performance and the confidence we have about the future," said John M. Devine, GM's vice chairman and chief financial officer.
But, noting that new-car sales fared better in December, January and February than industry officials expected, one analyst said he expects GM to fare even better.
"I think they are actually being a little pessimistic," said David Healy, an auto analyst who follows General Motors for Burnham Securities. "I think the outlook for GM, especially for the rest of , is better than that."
Healy said he expects GM to post a year-end profit of $4.65 a share this year, excluding Hughes.
Before yesterday, the consensus forecast by analysts surveyed by Thomson Financial/First Call was for earnings of 87 cents a share in the first quarter of 2002 and $2.95 for the year.
Healy said his bullish estimate on GM's earnings is based on his more optimistic outlook for U.S. vehicle sales.
Healy said cars and light trucks, including vans and sport utility vehicles, have been selling at an annual rate of 16.2 million vehicles since December.
He said that car and truck sales did not fall off nearly as much as industry officials had expected once the popular zero-percent financing ended.
GM is now forecasting total U.S. industry sales of 16 million units this year, about 1 million more cars and trucks more than it was predicting at the beginning of the year.
The higher sales estimate has prompted GM to boost first-quarter production by 20,000 vehicles to 1.34 million cars and trucks, 10 percent above last year's first-quarter output of 1.214 million vehicles.
For the second quarter, GM estimates that its North American production will be up about 4 percent to approximately 1.425 million vehicles. This includes 605,000 cars and 820,000 trucks.
For the full year, GM expects to produce more than 5.1 million vehicles in North America, an increase of more than 100,000 vehicles over its estimate at the start of the year.
It's not clear if GM's van plant in Baltimore will share in the increased output.
"We don't break out estimates by plants or by vehicles," said Tom Wickham, a GM spokesman.
Production of the Chevrolet Astro and GMC Safari vans made here was 51 percent lower last month than during January 2001. The company eliminated the plant's second shift in July 2000.
Looking even further ahead, Devine said it is possible for GM to earn $10 a share annually by the middle of the decade.
"We think it's a reasonable target to aim for," he said. "In fact, if we don't deliver this, we're probably not doing our jobs."
GM surprised analysts last month when it reported higher-than-expected fourth-quarter earnings of $255 million, or 60 cents a share.
For the full year, GM said it earned $1.5 billion, or $3.23 a share on sales of $127.3 billion, excluding special items.
During the same period, Ford Motor Co. posted a loss of $5.07 billion and the Chrysler division of DaimlerChrysler AG lost $320 million.
GM's shares rose $2.37 yesterday to close at $55.48 on the New York Stock Exchange.
GM also disclosed yesterday that it plans to sell $2.5 billion to $3 billion in convertible debt securities, which mature in 30 years and are convertible to common stock. Proceeds are to be used to reduce the company's pension fund liability and to pay for retirees' health care costs.