General Motors said Wednesday morning it will not only earn a bigger profit this year than previously expected, but it also will boost a stock repurchase program from $5 billion to $9 billion and raise its quarterly dividend from 36 to 38 cents per share.
“We made significant progress executing our strategic plan and the results are being demonstrated through our improved earnings,” Chairman and CEO Mary Barra said in a statement.
The automaker’s top executives — Barra, President Dan Ammann and Chief Financial Officer Chuck Stevens — presented their 2016 outlook at the Deutsche Bank auto industry conference in Detroit.
Specifically, they indicated GM expects to earn between $5.25 and $5.75 per share this year, up from previous guidance of between $5.00 and $5.50 per share.
Expanding the share repurchase program by $4 billion comes about 10 months after the first $5 billion was initiated in response to pressure from a group of four hedge funds who argued that GM’s shares were undervalued. Since the start of that program GM has bought back $3.5 billion of its own shares.
The optimism comes after the industry’s record U.S. sales of 17.5 million new vehicles with expectations of even better results this year.
There is uncertainty tied to China’s falling stock markets, but GM told investors that it expects its sales to continue growing there, but vehicle prices may fall by 4 percent to 5 percent over the next year or so.
GM shares fell 11 percent in the first seven trading days of 2016.