General Motors profit doubles to $898 million
The Associated Press
Posted: Feb 14, 2013 9:15 AM ET
Last Updated: Feb 14, 2013 4:23 PM ET
General Motors made money in North America and Asia and lost a bundle in Europe as it nearly doubled last year's fourth-quarter net profit.
But the numbers were complicated by a dizzying array of accounting gains and losses for tax credits and devaluation of European assets.
The biggest U.S. automaker reported net income of $898 million, or 54 cents per share, compared with $468 million, or 28 cents per share, a year earlier. Revenue grew 3 per cent to $39.3 billion.
The fourth-quarter profit included billions in one-time accounting gains and losses that ended up being a $100 million increase. Without the gain, the company earned 48 cents per share, falling short of Wall Street's expectations. Analysts polled by FactSet expected earnings of 51 cents.
Its shares slipped 92 cents, or 3.2 per cent, to close at $27.75 on the NYSE.
During the quarter, GM continued its recent pattern of making money in the U.S. and Asia but posting big losses in Europe as the economy there continues to cut into auto sales. GM made $1.4 billion pretax in North America, which was down $102 million from last year. But losses widened in Europe, as the company has predicted, to $699 million. GM's International Operations, which include China and the rest of Asia, earned $473 million. The company made $99 million in South America and $146 million on its financial unit.
For the full year, GM earned $4.9 billion, or $2.92 per share. That was down from $7.6 billion, or $4.58 per share, in 2011. The difference was largely due to one-time items. Excluding those, GM made $2.60 per share last year. Revenue for the year rose 1 per cent to $152.3 billion. The 2012 earnings also fell short of Wall Street expectations. Analysts predicted $3.23 per share on revenue of $151.1 billion.
In the fourth quarter, GM returned roughly $35 billion in U.S. and Canadian tax credits to its books. Under accounting rules, the company must book the credits because it's likely to use them to offset income taxes. GM has been solidly in the black for three years. But the gain largely was offset by removal of goodwill, devaluation of assets in Europe, the cost of shifting its white-collar pension plan to an insurance company annuity and the cost of buying back $5.5 billion worth of shares from the U.S. government.
Still, putting the tax credits back on the books was good news for the company because it's a sign of good prospects, Chief Financial Officer Dan Ammann said.
"We've established a clear track record of profitability over the last three years," he said. "It's a reflection of our confidence in the fact that we're going to generate significant profitability in the North American market going forward."
But the change means that GM will return to a 35 per cent tax rate, up from the mid-teens last year. It still won't pay U.S. federal income taxes for many years due to the write-offs.
GM also announced that its U.S. union workers would each get $6,750 in profit-sharing cheques next month because of the strong performance in North America. In 2011, the company and the United Auto Workers agreed to profit-sharing instead of pay raises.
In 2012, the Canadian Auto Workers agreed instead to pay raises and will not recieve profit-sharing cheques.
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