REPEAT: GM Reinstates Quarterly Dividend, Suspended in April 2020 -- WSJ
August 19 2022 - 9:27AM
Dow Jones News
By Nora Eckert
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General Motors Co. said Friday it plans to reinstate its
quarterly dividend, after suspending it in April 2020 to preserve
cash during the early days of the Covid-19 pandemic.
The Detroit auto maker also said it plans to resume
opportunistic share repurchases, saying progress on key initiatives
has instilled confidence it can fund growth in electric vehicles
and other advancements while returning capital to shareholders.
GM said it expects to pay the first dividend on Sept. 15 and
plans to increase its existing repurchase program of common stock
to $5 billion, up from the $3.3 billion remaining in the
program.
The move marks a shift from GM's position early this year. In
February, Chief Executive Mary Barra said the company wouldn't
resume paying out a dividend, to give priority to spending on EVs
and other growth plans.
In the spring of 2020, GM and other car makers suspended their
quarterly dividend payments, citing uncertainty around the health
crisis and looking to preserve cash as they shut down factories to
comply with lockdown orders and other Covid-19-related
restrictions.
Since then, GM's profits have rebounded, and it has set aside
billions of dollars to expand its lineup of EVs, including hefty
investments in battery factories. In all, the company plans to
spend $35 billion on electric and autonomous vehicles by 2025.
GM's share price has fallen about 34% since the start of the
year, more than those of rivals Ford Motor Co. and Stellantis
NV.
Ford reinstated its quarterly dividend late last year, after
suspending payments early in the pandemic. The Dearborn, Mich.,
auto maker then said in July that it would raise the dividend
payment to 15 cents a share.
When asked by an analyst this month about the dividend, GM
finance chief Paul Jacobson said the company would analyze how much
money it had in its funds after making costly EV investments.
"We've obviously been through a lot of turmoil over the last few
years," Mr. Jacobson said. "But as we start to emerge from that and
maybe we start to get through into better, more stable economic
times, we can have that consistent return."
GM's profits have remained healthy in recent quarters, lifted by
constrained inventory levels at dealerships and buyers' paying
higher prices for its vehicles. Still, its net income fell 40% in
the second quarter of 2022, mostly due to a loss in China and
supply-chain troubles that left the company with tens of thousands
of unfinished vehicles it couldn't sell.
Company executives in July said they expect factory output to
improve in the second half of the year, and GM maintained its
full-year guidance.
GM said it is still taking precautions to guard against
weakening economic conditions, including cutting discretionary
spending and curtailing hiring. Ms. Barra said in July that a
restructuring in 2019 and 2020 cut about $4.5 billion in annual
costs, helping prepare GM for any downturn.
Write to Nora Eckert at nora.eckert@wsj.com
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(END) Dow Jones Newswires
August 19, 2022 09:12 ET (13:12 GMT)
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