General Motors Corp. (GM) on Thursday reported a sharply wider $9.6 billion fourth quarter loss, reflecting what the automaker called the global economic crisis and industry-wide collapse in vehicle demand. The company's adjusted loss per share also came in worse than what analysts had expected.
The largest U.S. automaker reported a net loss for the fourth quarter of $9.6 billion or $15.71 per share, compared to a net loss of $722 million or $1.28 per share for the year-ago quarter.
Loss from continuing operations for the fourth quarter was $9.6 billion or $15.71 per share, compared to a loss from continuing operations of $1.5 billion or $2.70 per share in the fourth quarter of last year.
The 2008 fourth quarter results include $3.7 billion in special items, including a $1.1 billion impairment charge related to its for the Hummer and Saab brands, which are up for sale, a $1.0 billion charge relating to adjustments to the value of deferred tax assets in various countries outside of the U.S., $900 million of restructuring and capacity-related costs, $660 million increase to the Delphi reserve relating to the valuation of future pension obligations, $610 million of gross goodwill impairments in Europe and North America and a $533 million net gain from a bond exchange at GM's financial arm, GMAC Financial Services.
Excluding special items, adjusted net loss for the fourth quarter was $5.9 billion or $9.65 per share, compared to adjusted net income of $46 million or $0.08 per share in the prior year quarter.
On average, 10 analysts polled by Thomson Reuters expected the company to report a loss of $7.40 per share for the fourth quarter. Analysts' estimates typically exclude special items.
GM said it discontinued the use of hedge accounting treatment, which resulted in a positive net effect on fourth quarter earnings of $436 million. Also as a result of GM's increasing credit risk, the fair value of its derivative liabilities declined in the fourth quarter, resulting in a net gain of $1.4 billion.
Total revenue for the fourth quarter fell 34% to $30.78 billion from $46.80 billion in the same quarter last year. Revenue from automotive operations declined to $30.6 billion from $46.5 billion a year earlier, largely driven by the sharp decline in global industry volume. Nine analysts had a consensus revenue estimate of $35.13 billion for the fourth quarter.
GM North America posted a pre-tax loss of $3.5 billion for the fourth quarter, compared to a pre-tax loss of loss of $1.3 billion in the year earlier period. GM North America pre-tax adjusted loss widened to $2.1 billion in the fourth quarter from $1.1 billion a year ago.
GM's financial arm, GMAC Financial Services, GM's financial arm, reported net income of $7.5 billion for the fourth quarter, compared to a net loss of $724 million in the fourth quarter of 2007. Excluding the $11.4 billion gain on its bond exchange, GMAC's results in the fourth quarter reflected a net loss of $4.0 billion, driven mainly by losses in North America automotive finance and continued losses at Residential Capital, LLC.
GM burned through $6.2 billion in cash during the October-to-December quarter as it cut production and restructured amid a drastic slowdown in auto demand. The company had burned through $6.9 billion of cash in the third quarter. GM ended the fourth quarter with cash, marketable securities and readily available assets of the Voluntary Employees Beneficiary Association trust of $14.0 billion, down from $27.3 billion a year earlier.
The automaker said its U.S. hourly and salaried qualified pension plans are currently underfunded, on a combined basis, by about $12.4 billion.
Additionally, GM said it expects to receive a "going concern" opinion from its auditors in the 2008 annual 10-K report. GM and its auditors must determine whether there is substantial doubt about GM's ability to continue as a going concern.
For the full year 2008, the company reported a net loss of $30.9 billion or $53.32 per share, compared to a net loss of $38.7 million or $68.45 per share and loss from continuing operations of $43.3 billion or $76.52 per share for the full year 2007.
This marks the second biggest annual net loss in the automaker's 100-year history. The biggest annual net loss was recorded in 2007, when the Detroit, Michigan-based company reported an annual net loss of $38.7 billion or $68.45 per share, due largely to charges for unused tax credits. GM's cumulative deficit ballooned to $82 billion since the end of 2004, when it last reported an annual profit.
Adjusted net loss for the full year 2008 was $16.8 billion or $29.00 per share, compared to an adjusted net loss of $279 million or $0.49 per share in the previous year.
Total revenue for the full year 2008 fell 17% to $148.98 billion from $179.98 billion the prior year, mainly due to the steep drop in sales amid record low consumer confidence in the U.S. and sharply lower sales across all of GM's operating regions due to economic turmoil in the global markets.
Analysts expected the company to report a loss of $26.94 per share on revenue of 152.60 billion for the full year 2008.
"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half," Chairman and CEO Rick Wagoner said. "These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business.
In 2008, GM lost its title of the world's largest automaker after 77 years to Japan's Toyota Motor Corp. (TM). GM sold 8.36 million cars and trucks worldwide in 2008, down 10.8% from 9.37 million cars and trucks sold during 2007. Toyota's global sales fell 4% to 8.97 million vehicles in 2008.
The company has been kept afloat with emergency loans from the U.S. government since the start of the year. It has received $13.4 billion in federal funding in three trenches from the U.S. Treasury Department.
In an updated viability plan submitted to the U.S. Treasury Department last week, GM said it may need as much as $22.6 billion in additional aid from the U.S. government and that it would run out of cash as soon as next month without new federal funding.
The automaker also said it would cut 47,000 jobs worldwide this year and would close five more manufacturing plants.
Further, GM said it expects to make a decision to sell or phase out the Hummer brand by March 31, with a final resolution expected no later than 2010. The company has conducted a strategic review of the global Saab business and has offered it for sale. GM also plans to phase out the Saturn brand at the end of the current product lifecycle, if a spin-off or sale does not occur.
A meeting between GM executives and the Obama administration's autos task force began Thursday. The GM team includes CEO Rick Wagoner, CFO Ray Young and COO Fritz Henderson.
GM declined comment on its expectations for the meeting, but Young told reporters on a conference call earlier in the day on GM's dismal fourth-quarter financial results the task force is "in a fact-gathering mode" and "we are here in order to respond to their questions."
The task force has until March 31 to determine whether GM and Chrysler LLC, which is seeking $5 billion in new bailout funds on top of $4 billion already received, are commercially viable and deserve more help.
Ford Motor Co. (F) late last month reported a wider $5.9 billion loss for the fourth quarter amid a sharp drop in global vehicle demand. The company also said it burned $5.5 billion in cash in the quarter and will tap a revolving credit line after posting its biggest-ever annual loss, while reiterating that it does not require a federal loan to fund its operations.
GM shares are currently trading at $2.41, down 14 cents or 5.49%. The shares have fallen about 90% in the last one year.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.