General Motors Scraps Dividend, Buybacks

GM will suspend its quarterly cash dividend as it "navigates uncertainties in the global market created by (the coronavirus) pandemic," the carmaker said Monday.
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General Motors  (GM) - Get Report said Monday that it will suspend its quarterly cash dividend, as well as its share repurchase program, as it moves to strengthen its balance sheet amid the coronavirus pandemic. 

GM also said it has extended $3.6 billion under its three-year revolving credit agreement, until April 2022, and has taken "other significant austerity measures to preserve near-term available cash." The carmaker also said it remains committed to an investment-grade credit rating, as well as reinvesting in the business at pre-tax return levels of 20%. 

"We continue to enhance our liquidity to help navigate the uncertainties in the global market created by this pandemic," said CFO Dhivya Suryadevara. "Fortifying our cash position and strengthening our balance sheet will position the company to create value for all our stakeholders through this cycle."  

GM shares were marked 1.3% lower in early  trading Monday following the dividend suspension to change hands at $21.68 each, a move that would extend its year-to-date decline to around 39%.

GM declared a first quarter dividend of 38 cents per share on February 3, just days before posting stronger-than-expected fourth quarter earnings that were hit by a crippling United Autoworkers Union strike.

GM said adjusted earnings for the three months ending in December came in at 5 cents per share, four cents ahead of the Street consensus forecast. 

The figure isn't directly comparable to last year, however, given the $1.39 per share charge the group had to book for costs linked to last year's forty-day strike by GM members of the UAW. Group revenues, GM, said, fell 20% to $30.8 million, just shy of the Street consensus forecast of $31.1 billion

GM said at the time that it forecast djusted earnings in the region of $5.75 to $6.25 per share, compared to a Refnitiv forecast of $6.23 per share, and operating cash flow in the region of $13 billion to $14.5 billion.