• News
  • Finance

GM reports lower-than-expected 4Q earnings

DETROIT (AP) -- General Motors' fourth-quarter net profit rose 2 percent from a year ago, but the company fell short of Wall Street expectations as it spent heavily to restructure outside the U.S.

GM rode record North American earnings to a profit of $913 million, or 57 cents per share. That compares with $892 million, or 54 cents per share, a year ago. Revenue rose 3 percent to $40.5 billion.

Excluding one-time items, including a $700 million charge to exit the Chevrolet brand in Europe, GM made 67 cents per share. But analysts polled by FactSet expected 88 cents on revenue of $40.8 billion.

New CEO Mary Barra said GM's restructuring actions will strengthen the company for the future, and there's more restructuring to come. “This year we'll leverage our strength in the U.S. and China to execute important restructuring activities in other key global operations,” new Chief Financial Officer Chuck Stevens said.

GM missed analysts' estimates for the quarter because they “didn't comprehend” restructuring moves that the company made in December, Stevens said. Much of the restructuring costs were for employee severance expenses in Germany, where GM is closing two factories.

For the full year, GM's earnings fell 22 percent to $3.8 billion or $2.38 per share. Without one-time items, including $800 million in impairment charges, it earned $3.18 per share.

GM also announced that 48,500 U.S. hourly workers will get up to $7,500 in profit-sharing checks. That's up from $6,750 last year.

Shares fell 2.1 percent to $34.50 in premarket trading.

In North America, GM's main profit center, the company made $1.9 billion in the quarter before taxes, and a record $7.5 billion pretax for the full year. Stevens said the company's four brands gained market share in retail sales to individual customers, and its transaction prices rose.

Much of the profits came from full-size pickup truck sales. But the company recently has lost pickup sales to competitors Ford and Chrysler, which have raised discounts. But Stevens said GM will stick with its approach of selling cars and trucks on value rather than price. “What we want is profitable growth,” he said.

In Europe, the world's second-largest automaker lost $844 million for the full year, but that was less than half of the $1.9 billion it lost in 2012. GM lost $345 million in the struggling region in the fourth quarter, compared with a $761 million loss in 2012.

But outside North America and Europe, GM's results were weaker than a year ago.

GM earned $1.2 billion in its international operations, which include Asia, for the full year, down by more than half from $2.5 billion the prior year. GM's international operations earned $208 million in the fourth quarter, down from $676 million in 2012. Without $400 million in profits from China, GM's International Operations would have lost $200 million in the quarter, a problem area that the company says it's addressing.

Stevens said there was earnings weakness throughout the international unit, including costs for the end of manufacturing operations in Australia.

GM's operating profits also fell in South America, where it earned $327 million for the full year, down from $457 million in 2012. Fourth quarter earnings were $27 million, compared with $135 million in 2012. Stevens blamed the drop on price controls and economic problems that have shuttered production in Venezuela, and currency exchange problems in Argentina.

In Europe, General Motors Co.'s losses narrowed to $345 million pretax from $761 million last year. Revenue rose for the first time in two years, Stevens said.

Like GM, Ford Motor Co. is hoping investors forgive short-term losses in favor of investment in the future. Ford, which earned $7.2 billion in 2013, has already warned investors of leaner results this year as it launches a record 23 vehicles and continues building seven plants around the world. GM also has warned of lower results in the first half of this year due to restructuring costs, as well as vehicle launch and marketing expenses.


AP Auto Writer Dee-Ann Durbin contributed to this report.

User Response
0 UserComments