Automaker more than halves Europe loss

GM Q4 net income rises 2% to $913 million

Automaker more than halves Europe loss

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DETROIT -- General Motors said its fourth-quarter earnings rose 2 percent to $913 million, helped by strong pricing in North America, capping its fourth straight profitable year since exiting bankruptcy. GM also more than halved its loss in Europe during the final three months of 2013.

The net result of several one-time items, including costs related to GM's wind-down of most of its Chevrolet sales in Europe and manufacturing in Australia, shaved about $200 million from the bottom line. Earnings before interest and taxes and excluding nonrecurring items -- the figure that GM considers the best measure of its underlying performance -- rose 52 percent, to $1.9 billion.

It was GM's 16th straight profitable quarter following its mid-2009 bankruptcy.

Fourth-quarter revenue rose 3 percent, to $40.5 billion.

For the full year, GM's net income fell 22 percent to $3.77 billion. Higher tax expenses and other onetime items hurt the full-year bottom line by $1.3 billion. Pretax profit excluding onetime items was $8.58 billion, up 9 percent from 2012.

"Launches of some of the best vehicles in our history combined with significant improvements in our core business led to a solid year," GM CEO Mary Barra said in a statement. "The tough decisions made during the year will further strengthen our operations."

It was GM's first quarterly earnings report since Barra took over as CEO last month from Dan Akerson, who retired.

GM said it will pay up to $7,500 in profit-sharing bonuses to about 48,500 U.S. hourly employees, up from $6,750 last year.

The earnings report missed analysts' expectations on a per-share basis. GM's profit of 67 cents a share, excluding onetime items, fell short of the 87-cent average of 14 analysts' estimates compiled by Bloomberg.

GM CFO Chuck Stevens told reporters at GM headquarters today that most of that gap was attributable to a higher tax rate than analysts had expected as well as restructuring costs in Europe that analysts hadn't accounted for.

Regional performances

GM continued to shave its losses in Europe. Its fourth-quarter loss of $345 million was down from $761 million during the year-earlier period. For the year, GM lost $844 million in Europe, down from $1.94 billion in 2012.

GM posted a record $7.46 billion in pretax profit in North America for the full year, excluding one-time charges and gains.

Fourth quarter pretax profit in North America jumped 65 percent, to $1.88 billion, as stronger pricing – especially for GM's redesigned full-sized pickups.

GM's International Operations, which includes China, Australia, Korea and several other Asian markets, posted $208 million in pretax profit. But China alone had pretax profit of $400 million, while the remaining countries combined for a loss of about $200 million.

For the year, pretax profit from International Operations was $1.23 billion, down from $2.53 billion in 2012.

Stevens said several challenges are weighing on earnings in those markets, including weaker pricing due to the strong yen; unfavorable foreign exchange rates and pricing pressure in the Middle East.

Pretax profit in South America fell to $27 million, from $135 million, hurt by sagging volumes in Venezuela and restructuring costs. The economic turmoil in Venezuela, Peru and other South American markets, caused by soaring inflation, poses a risk to GM's business there, Stevens said.

You can reach Mike Colias at mcolias@crain.com.

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