Profits return to GM as debt and costs cut

 
City A.M. Reporter
GENERAL Motors yesterday posted fourth-quarter results that topped Wall Street expectations, capping its most profitable year in over a decade after slashing costs and debt in a landmark bankruptcy.

Profit for all of 2010 was $4.7bn (£2.9bn), GM’s first full-year earnings since 2004 and its largest profit since 1999, when it earned $6bn on booming sales of trucks and SUVs.

Separately, GM said the audit committee of its board had determined the company’s financial operations under finance chief Chris Liddell had remedied a “material weakness” in financial reporting, addressing a lingering concern for investors.

The automaker said it would pay more than $200m in bonuses to hourly workers, including payouts of about $4,300 for each of its roughly 45,000 US factory workers represented by the United Auto Workers union.

Liddell said he expected the current quarter would represent a “strong start” to 2011 and said the fourth-quarter had been slightly ahead of the automaker’s internal projections.

“From our point of view it was a very good result,” he said.

Fourth-quarter net income was $510m, or 31 cents per share. Earnings for the first three quarters of 2010 totalled $4.2bn.

After adjusting for a one-time charge for buying back preferred shares held by the US Treasury, fourth-quarter earnings per share were 52 cents, at the high end of Wall Street expectations.

On an adjusted basis, GM’s earnings before interest were slightly below expectations at about $1bn, reflecting higher costs as the automaker ramped up vehicle development efforts and spent more on advertising.

Fourth-quarter revenue was $36.9bn, up from $32.3bn a year earlier.

GM’s European operations posted a loss of $568m for the fourth-quarter and a loss of $1.7bn for the year. The automaker has said it hopes the unit – known for its Opel brand – will break even this year.