General Motors Profits Rise, but Europe, Charges Weigh
Declining market share and continued weakness its European operations dragged on the earnings of General Motors in the fourth quarter, which missed Wall Street's expectations as the company took nearly $34 billion worth of assorted charges against its earnings.
The Detroit-based automaker, currently about 19 percent owned by the U.S. government, posted fourth quarter earnings of 48 cents per share excluding items, versus a 39 cent profit in the comparable year ago period. Revenue rose to $39.2 billion, from $37.99 billion a year ago.
Those figures, however, fell short of analysts expectations, which saw GM posting a profit of 51 cents on $39.15 billion in revenue, according to a consensus estimate from Thomson Reuters.
Daniel Ammann, GM's CFO, put the best face on the results, calling them "very robust" in an interview on CNBC's "Squawk Box" early Thursday.
GM's quarter "sets us up nicely for 2013," Ammann said. "We have a huge onslaught of product introductions coming into 2013, here in the U.S. and all around the world."
Yet the company continues to grapple with a range of problems that forced it into the embrace of the government four years ago.
During the quarter, GM took a $26.2 billion non cash goodwill impairment charge, a $5.2 billion non-cash impairment charge on some of GM Europe's assets, and a $2.2 billion charge on U.S. salaried pension plans.
GM's worldwide market share declined slightly during the quarter, from 11.5 to 11.6 — underscoring the intense global competition from its challengers in Asia and Europe. Year over year, the erosion was more pronounced: GM's market share went to 11.5 percent during the year from 11.9 percent in 2011.
In its Europe segment, the company reported a $700 million adjusted loss in the quarter, compared to a $600 million loss in the prior year-ago quarter, even as its international unit saw a modest overall profit.
The results raise questions about how GM will fare once the federal government completely exits its remaining stake of the company's stock. In December, the Treasury Department announced a plan to sell its shares within 12 to 15 months, all but guaranteeing a loss of nearly $49.5 billion.
GM completed its second full year as a public company since its fall 2010 initial public offering, which followed the bankruptcy restructuring and $50 billion U.S-taxpayer bailout of the prior year.
One area of improvement was seen in GM's pension obligations. The company said its U.S. defined benefit pension plans ended the year 84 percent funded, with the underfunded portion estimated at $13.1 billion.
GM stated that it expects "no mandatory contributions to U.S. defined benefit pension plans for at least five years. While the company will continue to evaluate opportunities to make voluntary cash contributions, it has no current plans to do so in 2013."
After the earnings announcement, the U.S. auto giant saw its shares fall by more than two percent in afternoon trading. (Click here to track the market reaction to GM's earnings report.)
--Clarification: In December, the federal government announced that it was selling its 40 percent stake in GM. According to a company spokesman, the government has already sold approximately half that amount, leaving its stake at around 19 percent.