GM's Q4 profit exceeds expectations
In an impressive comeback from bankruptcy, General Motors last year posted its first annual profit since 2004, putting the company on pace to repay more of the taxpayer bailout and even recapture the title of No. 1 global automaker this year.
The company's net income was an impressive $4.7 billion in 2010, fuelled by strong sales in China and the U.S. as the global auto market began to recover. Still, it now faces a challenging 2011 with an aging U.S. model lineup, rising gas prices that could cut into truck sales and a European unit that must be restructured to turn a profit.
GM reported net income of $510 million in the fourth quarter, or 31 cents per share, its lowest quarterly profit of the year, but still far better than the $3.5 billion it lost in the same period in 2009.
The profits included $400 million in charges mainly for paying preferred stock dividends and buying preferred stock from the U.S. government. Without the charges, the company earned 52 cents, exceeding Wall Street's expectations. Analysts polled by FactSet expected 49 cents per share.
Revenue for the quarter was $36.9 billion. That also beat analysts' estimates of $34.3 billion.
For the full year, GM earned $2.89 per share on revenue of $135.6 billion.
It was the company's best performance since earning $6 billion in 1999 during the height of the pickup truck and sport utility vehicle sales boom.
The full-year profit is impressive considering that from 2004 through 2009, GM was in a state of perpetual restructuring, trying to downsize its work force and shrink its factory capacity to match falling demand for its vehicles. The company lost more than $80 billion during the period and almost ran out of cash in 2008, when the government began a bailout that eventually reached $49.5 billion.
With government financing, GM went into bankruptcy protection in June 2009, leaving a quick 40 days later cleansed of burdensome debt and labour costs. With lower costs and new models such as the Chevrolet Equinox — a small SUV that seats five — GM began its comeback.
"Last year was one of foundation building," Chairman and CEO Dan Akerson said in a statement. "We demonstrated GM's ability to achieve sustainable profitability near the bottom of the U.S. industry cycle with four consecutive profitable quarters."