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January 14, 2014 11:34 pm
General Motors on Tuesday set the seal on its remarkable recovery from the auto industry recession by announcing that it was resuming dividend payments for the first time since its government-managed bankruptcy in 2009.
GM’s move – taken hours before Dan Akerson was due to hand over to Mary Barra as chief executive – comes only five weeks after the US Treasury sold the last of the stake in the company it took on when the carmaker emerged from its 2009 bankruptcy.
Mr Akerson said that the company – which will pay a 30 cent a share dividend on March 28 – was now designing high-quality, world-class vehicles and delivering “consistently solid results”.
“The board understands that our investors should share in this success and is pleased to announce a quarterly dividend for our common stockholders,” he said.
In October, GM announced it had earned $2.86bn of net income for the first nine months of 2013, on $115bn of revenue.
The company announced the dividend after the close of trading in New York, but the shares rose 2.97 per cent to $41.21 in after-market trading.
Dan Ammann, the chief financial officer who will become GM’s president on Wednesday as Ms Barra becomes chief executive, said GM’s “fortress” balance sheet, substantial liquidity, consistent earnings and strong cash flow provided the foundation for an “ongoing payout”.
“This return to shareholders is consistent with our capital priorities and is an important signal of confidence in our plans for a continuing profitable future,” he said.
GM has been buoyed since emerging from bankruptcy by the radical cutting of its costs during its brief period in Chapter 11, as well as by the sharp rebound in the US auto market, where it is the biggest manufacturer by sales. The combination has kept more of the company’s North American factories working at full capacity than at any other time in recent memory.
The dividend restoration is the latest of several moves in recent weeks to underline the US auto industry’s growing normalisation after the government-led bankruptcy restructurings of both GM and Chrysler in 2009 and the deep restructuring that Ford undertook at the same time.
The old, pre-bankruptcy General Motors last paid a dividend in May 2008, shortly before the onset of the financial crisis that plunged the company deep into losses and forced the US government to step in with a rescue package.
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