MILFORD, Michigan, USA (Reuters) -- General Motors Co. said it expects its first profit in Europe in more than a decade in 2016 and that it will also hit its targeted 10 percent operating profit margin for North America the same year.
GM had previously said it would hit those targets by mid-decade, but it offered the more specific timetable at its investor meeting at the company's test track outside Detroit.
GM CEO Mary Barra said the target for Europe took into account steps to minimize the impact of the downturn in the Russian market.
GM said $1.5 billion in improved operating results in the region by 2016 includes the elimination of $700 million in restructuring costs and the addition of $400 million from increased sales and market share. GM last reported a profit in Europe in 1999.
Investors want more proof that GM will meet its promises.
"GM is still very much in a 'show me' status with the investment community," Gabelli & Co. analyst Brian Sponheimer said. "That it has the confidence to target a profitable Europe is promising, but solid execution by this unproven management team will ultimately win over investors."
The No. 1 U.S. automaker also said any cash returned to shareholders would be mostly through increased dividends. In March, it paid its first quarterly common-stock dividend in almost six years. Some analysts had speculated GM might offer a broad stock buyback program, tapping its $39 billion in cash and equivalents.
The projections came two days after its smaller rival, Ford Motor Co., disappointed investors with its financial outlook. Ford slashed its profit outlook for 2014, blaming higher recall costs in North America and steeper losses in Russia and South America. It also offered a disappointing 2015 profit forecast.