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GM Posts Record Annual Profit; Q4 Results Disappoint

GM Posts Record Annual Profit; Q4 Results Disappoint
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2/16/2012 9:37 AM ET

Automaker General Motors Co. (GM: Quote) on Thursday reported the largest annual profit in its history, two years after emerging from bankruptcy. The results reflect strength in the company's North American operations.

However, results for the fourth quarter declined to reach the lowest in two years and came in below analysts' expectations. The quarterly results reflect losses in Europe and South America. Revenue growth was 3 percent for the quarter.

Looking ahead to 2012, GM expects to increase its top-line revenue year-over-year. In addition, the company expects continued pricing improvement with cost inflation well contained, while pension expense are expected to be unfavorable. The company projects capital spending in a range of $8 billion.

GM also said it is taking further steps toward its goals of de-risking and fully funding its U.S. pension plans. Effective September 30, 2012, GM will freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan, or 401(k).

The company's initiative will affect its U.S. salaried employees hired prior to January 1, 2001, impacting about 19,000 employees. GM noted that salaried employees hired after that date are already covered by a defined contribution plan.

Based on the North American segment's 2011 financial performance, GM will pay profit sharing of up to $7,000 to about 47,500 eligible GM U.S. hourly employees. The full payout will be paid to employees who had 1,850 or more compensated hours in 2011.

GM's fourth-quarter net income attributable to common stockholders declined to $468 million or $0.28 per share from $510 million or $0.31 per share in the year-ago quarter.

The latest quarter's results include a net loss from special items of $0.11 per share, while the prior-year period's results include a net loss from special items of $0.21 per share.

On average, 18 analysts polled by Thomson Reuters expected earnings of $0.41 per share. Analysts' estimates typically exclude special items.

Net revenue for the quarter rose 3 percent to $38.00 billion from $36.90 billion in the year-ago period, but missed analysts' consensus of $38.21 billion.

Adjusted earnings before interest and tax rose to $1.1 billion from $1.0 billion in the year-ago period. In North America, GM earned $1.5 billion, up from $0.8 billion in the prior-year quarter.

In Europe, including the Opel brand, GM's loss was $562 million. In South America, the automaker lost $255 million.

Total vehicle sales in the quarter increased to 2,236,000 units from 2,171,000 units with growth across all regions. For fiscal year 2011, GM's net income rose to $7.6 billion or $4.58 per share from $4.7 billion or $2.89 per share in the prior year. Revenue rose 11 percent to $150.3 billion from $135.6 billion in the previous year. Analysts expected the company to earn $3.91 per share for the year on revenues of $149.98 billion.

The European segment lost $747 million in the year, compared to loss of $1.95 billion last year. GM had, until November, expected to announce full-year break-even results for the European segment.

GM closed Wednesday's trading at $24.93. In Thursday's pre-market, the stock is adding $0.27 or 1.08 percent to $25.20.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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