GM Records Its Highest Profit Ever: $7.6 Billion

GM Records Its Highest Profit Ever: $7.6 Billion
Market News
Like Us On Facebook
Like Us On Facebook

General Motors earned its largest profit ever in 2011, two years after it nearly collapsed into financial ruin.

Strong sales in the U.S. and China helped the 103-year-old carmaker turn a profit of $7.6 billion, beating its old record of $6.7 billion in 1997 during the pickup truck and SUV boom.

GM is a vastly different company than it was back then. It’s smaller, has less debt and its contract with the United Auto Workers is less costly. But it took a government bailout and a trip through bankruptcy protection in 2009 to cut its bloated costs. The company made record money last year even though U.S. auto sales were near historic lows at 12.8 million cars and trucks.

But problems surfaced in its 2011 results. GM lost $747 million before taxes in Europe, and its South American operations lost $122 million. Sales growth slowed in the U.S. in the fourth quarter, even as more Americans bought cars and trucks.

Also, GM’s fourth-quarter profit fell 8 percent and results missed Wall Street expectations.

GM’s stock price fell 8 cents, or 0.3 percent, to $24.85 in premarket trading.

The U.S. government still owns 26.5 percent of the company and is waiting for the share price to rise before selling in an effort to recoup the bailout money.

Last year, GM made the bulk of its income in North America, where its pretax profit totaled $7.2 billion. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down.

During the year, GM’s global sales rose 7.6 percent to 9.03 million vehicles to help it reclaim the title of world’s largest automaker from Toyota Motor Corp.

“We will build on these results as we bring more new cars, crossovers and trucks to market,” CEO Daniel Akerson said.

This year, GM expects to increase its revenue as global auto sales grow and it charges more for models. However, it will make less money per vehicle as the mix of sales continues to shift to cars from trucks, which have bigger sticker prices. It also expects to invest $8 billion on new products and technology, and says pension expenses will rise. The company wants to keep expenses down by freezing its underfunded U.S. pension plan for salaried workers.

Chief Financial Officer Dan Ammann said the company’s restructuring in Europe cut pretax losses by more than $1 billion from 2010, but it didn’t go far enough.

He hinted that GM will have to cut factories and jobs in the region, saying the whole auto industry has too many factories there.

“We clearly have work to do in Europe, we have work to do with the South American business,” he said.

The 2011 profit of $4.58 per share was 62 percent higher than a year earlier. Full-year revenue rose 11 percent to $150 billion.

GM said 47,500 blue-collar workers in the U.S. will get $7,000 profit-sharing checks in March. The checks are based on North American performance and are a record for the company.

The company has placed Vice Chairman Steve Girsky in charge of the European management board and is adding executives in preparation for restructuring. Factory closures and layoffs are likely but could provoke a fight with powerful labor unions.

Girsky has said GM intends to fix the European unit, made up of the Opel and Vauxhall brands, and keep it in the company. GM came close to selling the unit in 2009.

Associated Press

Share Tweet
React
Like Us On Facebook
Like Us On Facebook

Preston Waters

Preston Waters is a thinker. He's not your traditional philosophical persona, however, as he leaves no topic untouched. Covering all the bases, from business to women, Preston Waters is the ultimate man's man for Gen-Y.

More In Market News

News Preston Waters

Stocks Off to Stellar Start in May

Stocks were kicking off May in high style Tuesday, posting sharp gains after a much better-than-expected report on U.S. manufacturing activity. The Dow Jones Industrial Average was rising 103 points, or 0.8%, at 13,317, after hitting a four-year high at 13,338. The S&P 500 was up 14 points, or 1%, at 1413, and the Nasdaq was adding 23 points, or 0.7%, at […]

News Preston Waters

Bank Of America, JPMorgan: Dow Midday Movers

U.S. stocks were rising in midday action Tuesday following a better-than-expected read on U.S. manufacturing activity.The Dow Jones Industrial Average was up more than 116 points, or 0.9%, at 13,330. The biggest percentage gainers within the Dow were Bank of America (BAC), JPMorgan Chase (JPM) and Intel (INTC). Shares of Bank of America rose 2.59% to $8.32. The bank said Tuesday it plans to lay […]

News Preston Waters

Monster Stocks Soar Amid Rumors Coca-Cola Is Set To Buy Energy Drink

Monster Beverage Corp’s shares soared on Monday following a report that Coca-Cola Co. was considering buying the energy drink maker. The Wall Street Journal cited unnamed people in reporting that the world’s biggest soft drink maker was in talks to buy Monster. If a deal transpired, Monster would be Coca-Cola’s largest brand acquisition ever. Monster declined […]

News Preston Waters

Stocks Surge After Strong Manufacturing Report

Stocks were surging in morning action Tuesday after a much better-than-expected report on the pace of national manufacturing activity in April.The Dow Jones Industrial Average was rising 80 points, or 0.6%, at 13,294. The S&P 500 was up 12 points, or 0.8%, at 1410, and the Nasdaq was adding 29 points, or 1%, at 3075. Stocks finished modestly lower Monday, marking […]

News Preston Waters

Bank Of America Keeps Shrinking

Bank of America (BAC)’s plan to lay off some of its highest-paid executives looks like the right response to the current banking environment. The Wall Street Journal reported Tuesday the bank will cut 2,000 positions in its investment banking, commercial banking and non-U.S. wealth-management units targeting “the high-earning employees whose efforts helped Merrill Lynch account for the bulk of […]

News Preston Waters

Stock Market Story: May 1

The first trading day of May got off to a mixed start early Tuesday with all three major U.S. equity indices honing to close to the flat line ahead of a key report on the pace of U.S. manufacturing activity in April. The Dow Jones Industrial Average was down 9.5 points, or 0.07%, at 13,204.The S&P 500 was up less than a […]

Also On Elite

World

Japanese Restaurant Serves Live Frog And It’s Causing Quite The Controversy

One of the most bizarre nightspots in Tokyo is the Shinjuku district; it’s home to a series of restaurants that cook up disgusting animal-based delicacies. Menu items include soft-shelled turtle, pig testicles, snake liquor and grilled salamander. However, probably the hardest dish to look at, let alone eat, is the signature dish of the Asadachi […]

World

Smoking Tea Is Now A Thing, And Apparently It’s Relaxing And Good For You

Smoking weed to relax used to be relatively taboo, at least in terms of how the general population viewed the practice. With legalization laws passing in more and more states, lighting up isn’t looked down upon so much anymore. After all, marijuana is a plant and for some, it really does help with psychological problems […]

Music

Why The New Black Keys Music Video Might Be Some Of Their Best Work Yet

I won’t lie: The Black Keys’ new song, “The Weight of Love,” and its corresponding short-film video, directed by Theo Wenner, mesmerizes. The seven-minute song is moody and bluesy with psychedelic undertones, and it’s the opener on their new album, Turn Blue. The video captures a tribe of women on a deserted lighthouse island, peacefully leading […]

Sports

16 Things We Learned From All 16 Games In NFL: Week One

Even though the sun was shining, the weather was gorgeous and the calendar still technically said summer, Sunday was the equivalent of Christmas Day for NFL fans. Week one represents a clean slate for everyone’s team, from the defending Super Bowl Champion Seahawks, to the likes of the lowly Jaguars and Raiders. Every week, join us […]