Poor regional results hit GM’s Q4 profit
Print Edition
General Motors Co posted a weaker-than-expected fourth-quarter profit yesterday as results in North America, Asia and South America disappointed, sending shares down more than 3 percent in pre-market trading.
Chief Financial Officer Chuck Stevens said the miss occurred because analysts did not fully account for restructuring relating to plans to close the Bochum, Germany plant later in the year, as well as a higher-than-expected tax rate.
“Our view is that the sell-side consensus didn’t comprehend that restructuring,” he said.
“The final announcement associated with that wasn’t done until early December. Due to that, we needed to book some of the restructuring costs, primarily related to the severance portion of that program.”
Stevens said that while Europe was improving, the downside risk in South America was rising as Venezuela and Argentina dragged down results. The international regions outside China remained under pressure, he said.
Net income rose to US$913 million, or 57 cents a share, from US$892 million, or 54 cents a share, in the year-earlier quarter.
The quarter included about US$200 million in special items related to the exit of the Chevrolet brand from Europe, the end of manufacturing in Australia, offset by a gain on the sale of equity in Ally Financial and other items.
Excluding the items, GM earned 67 cents a share. Analysts polled by Thomson Reuters I/B/E/S had expected 88 cents a share. The operating profit rose 58 percent to US$1.9 billion.
Revenue in the quarter rose 3 percent to US$40.5 billion, below the US$41.08 billion analysts had expected.
GM’s North American operating profit hit US$1.88 billion, up from US$1.14 billion a year earlier, but that fell short of the US$2.04 billion expected by analysts surveyed by Reuters.
The higher profit was driven by stronger pricing for its redesigned full-size pickup trucks.
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