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GM Reports $510 Million Profit as Sales Rise in North America
I'm sure the GOP is proud of their American brothers and sisters. 
GM Reports $510 Million Profit as Sales Rise in North America
GM Reports $510 Million Profit as Sales Rise in North America - Businessweek
Quote:
General Motors Co., the largest U.S. automaker, reported fourth-quarter net income of $510 million, completing its most profitable year since 1999 as vehicle sales increased in North America.
Net income was 31 cents a share, Detroit-based GM said today in a statement. Excluding a charge related to a purchase of preferred shares from the U.S. Treasury Department, profit was 52 cents a share. The average estimate of 13 analysts surveyed by Bloomberg was for profit of 44 cents. Sales rose to $36.9 billion, topping the $34.6 billion average estimate.
Chief Executive Officer Dan Akerson is hastening the development and introduction of new models as GM revamps a lineup that is older than that of rivals such as Ford Motor Co. GM added U.S. market share in the quarter, helping it earn $5.75 billion in 2010 before interest and taxes in North America.
“Their market share has stabilized and has actually started increasing without a lot of new products,” Mark Vincent, senior vice president of U.S. Equities for Standard Life Investments in Boston, which oversees $230 billion, including GM shares. “The secret to market share stabilizing has been customers starting to believe GM is back.”
Full year net income at GM, which emerged from bankruptcy in 2009, was $4.67 billion. That’s the largest annual profit since its predecessor earned $6 billion in 1999. The comparison excludes GM’s $127.1 billion in net income in the third quarter of 2009, when it accounted for its recapitalization after bankruptcy. Sales for 2010 climbed to $135.6 billion.
GM rose 24 cents to $34.83 at 9:44 a.m. in New York Stock Exchange composite trading. The shares climbed 4.8 percent from GM’s IPO in November through yesterday’s close.
Cruze, Volt
GM had said fourth-quarter earnings would be “significantly lower” than earlier periods because of spending for new cars including the Chevrolet Volt plug-in and Cruze compact. Chief Financial Officer Chris Liddell said the results were at the “top end” of the company’s expectations.
GM spent about $1 billion more in the fourth quarter on marketing and engineering than in the previous three months, Liddell told reporters today in Detroit.
“Some of the factors that we talked about that were going to be in place in the fourth quarter will go away,” he said, adding that first-quarter earnings will improve on a sequential basis.
The pretax loss in GM’s European operations widened to $568 million in the fourth quarter from $559 million in the third quarter. The full-year pretax loss was $1.76 billion.
International Operations
Earnings before interest and taxes for GM’s international operations, which include China, fell to $334 million from $516 million in the previous three months.
GM increased fourth-quarter truck production 22 percent from a year earlier to about 463,000 units, while car production rose 2.1 percent to about 240,000 vehicles.
The inventory of trucks could be a concern if oil prices rise because of violence in Libya and other parts of the Middle East, said David Whiston, an equity analyst with Chicago-based Morningstar Inc. Whiston, who has a $46 per share target price on GM’s shares, said he wants to see how long the oil price gain lasts before changing his outlook on the automaker.
“If this is temporary, I won’t change my valuation at all,” Whiston said.
Higher costs for raw materials such as steel, aluminum and rubber may constrain automakers from taking advantage of record global sales this year, said Stephen Brown, a Chicago-based auto analyst for Fitch Ratings.
‘Commodity Pressure’
“Their ability to pass the extra cost to consumers is going to depend on the demand,” Brown said in an interview before GM reported earnings. “If we see weakening in demand with continued commodity pressure, it might become more difficult to pass those costs along, and that could be an area for concern.”
GM paid down about $13 billion of debt and preferred shares last year and reduced its pension obligations by about $6 billion, Liddell said. The pension was underfunded by about $11.5 billion as of Dec. 31, he said.
Consumers paid an average of $33,793 for GM’s models during the last three months of 2010, up 14 percent from a two-year low in the third quarter of 2009 and the most for any period since then, according to online auto researcher Edmunds.com.
Models such as the Chevrolet Equinox and Cadillac SRX sport-utility vehicles and Buick Lacrosse sedan helped GM increase U.S. deliveries by 7 percent last year. Sales of the four brands GM kept after its bankruptcy surged 21 percent, exceeding the 11 percent gain for the industry, according to researcher Autodata Corp.
Market Share
GM’s U.S. market share held above 19.3 percent in each month during the quarter, after sinking as low as 18 percent in September, according to Autodata in Woodcliff Lake, New Jersey.
GM said today profit-sharing checks for its 45,000 U.S. hourly workers will average $4,300, more than double the previous record for payout to unionized employees.
The company said a previously disclosed “material weakness” in its financial controls no longer exists as of Dec. 31. The company said in a filing related to its IPO that procedures and controls weren’t effective as recently as June 30.
GM had $82 billion in losses from 2005 to 2008 before tumbling into bankruptcy in 2009.
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02-24-2011, 10:58am
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