Thu., 4:06pm: GM spending on vehicles, regions dent bottom line
DETROIT – General Motors spent billions last year rolling out new models to update its lineup of cars and trucks and restructuring to fix longstanding problems overseas.
The spending put a dent in GM’s bottom line, causing the world’s second-biggest automaker to fall short of Wall Street’s expectations in the fourth quarter. Still, GM posted a healthy profit as strength in North America and China offset troubles in other areas.
“We clearly have a lot of work ahead to make all of our regions solidly and consistently profitable,” new CEO Mary Barra told industry analysts Thursday.
GM’s net profit for the quarter rose 2 percent from a year ago to $913 million, or 57 cents per share. Revenue increased 3 percent to $40.5 billion. Excluding one-time items such as a $700 million charge to pull the Chevrolet brand out of Europe, GM made 67 cents per share. But analysts polled by FactSet expected 88 cents on revenue of $40.8 billion.
New Chief Financial Officer Chuck Stevens said Wall Street analysts “didn’t comprehend that restructuring,” which involved employee severance expenses as GM moves to close two factories in Europe.
Missing estimates pushed GM shares down in the morning, but they recovered by the afternoon and were up 44 cents to $35.86.
Barra, the first woman to lead a major automaker, said GM has to build the reputation of its brands, as well as further cut material, logistics and fixed costs. “It’s going to be a multi-year journey,” said Barra, who on Thursday was named the most powerful woman in business by Fortune magazine.
GM rolled out 37 new or freshened models worldwide last year and plans to introduce 30 more this year including the Chevrolet Canyon and GMC Colorado midsize pickup trucks, new heavy-duty full-size pickups and redesigned big SUVs like the Cadillac Escalade and Chevy Tahoe.
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. But the company said that if taxes and restructuring costs are excluded, it made $8.6 billion for the year, up $700 million from last year.
In North America, GM 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 average sales price per vehicle rose. The North American profits paid off for 48,500 GM hourly workers who will get $7,500 in profit-sharing checks.