GM posted a $510 million net profit in the fourth-quarter

Article by Christian A., on February 24, 2011

General Motors Co., for its first full year of operations, posted $4.7 billion in net income attributable to common stockholders for calendar year 2010. While GM posted $135.6 billion in revenue for the year, its automotive cash flow from operating activities was $6.6 billion and automotive free cash flow was $2.4 billion, which signifies the effect of a $4.0 billion in voluntary cash contributions to the carmaker’s pension plans in the United States.

GM chairman and chief executive Dan Akerson quipped that 2010 was a foundation building year, during which GM demonstrated its ability to achieve sustainable profitability – by posting four straight profitable quarters – even though the US auto industry is currently near bottom of the cycle.

For the fourth quarter of 2010, GM posted $0.5 billion in net income attributable to common stockholders, including net charges of $0.4 billion. This translates to a $0.21 reduction to fully diluted earnings per share, resulting from a previously disclosed $0.7 billion loss emanating from the purchase of US Treasury (UST) preferred shares but partially offset by the impact of EBIT adjustments.

However, GM logged around $0.3 billion in favorable EBIT adjustments, including $0.2 billion in gains relating to the repayment of the VEBA Note as well as $0.1 billion in cumulative gains relating to the sale of Nexteer and the acquisition of the facility in Strasbourg, France. Meanwhile, GM North America (GMNA) posted $0.8 billion in EBIT in the fourth quarter of 2010, rebounding from $3.4 billion in losses in the same period in 2009.

GM Europe (GME), on the other hand, logged $0.6 billion in fourth quarter 2010 losses before interest and taxes, which is better than $0.8 billion in losses in the same quarter a year ago. On the other hand, GM International Operations (GMIO) recorded $0.3 billion in EBIT in the fourth quarter of 2010, a drop from $0.4 billion in the same period a year prior 2009.

GM South America (GMSA) also posted a drop in fourth quarter EBIT from $0.3 billion to of $0.2 billion. GM commenced reporting GMSA results as an operating segment in the fourth quarter, and has adjusted segment reporting for prior periods. Meanwhile, GM’s automotive net cash flow from operating activities in the quarter was negative $1.7 billion, reflecting $4.0 billion in voluntary cash contribution to the US pension plans.

After subtracting $1.1 billion in capital expenditures, automotive free cash flow was pegged at negative $2.8 billion. GM’s fiscal performance in 2010 has prompted the company to decide to pay profit sharing to around 45,000 eligible GM US hourly employees at average payout per employee of $4,300, and around 3,000 eligible GM Components Holdings (GMCH) employees at average payout per employee of $3,200.

On the other hand, GM has completed assessment of the remediation actions taken to address its material weakness regarding the financial reporting process. Following the assessment, GM’s management team and Audit Committee of the Board of Directors concluded that such material weakness has ceased to exist as of December 31, 2010.

GM vice chairman and chief financial officer Chris Liddell remarked that for 2011, the company’s focus is to build on its progress and continue generating momentum in the auto market. Liddell quipped that GM hopes to have a strong start in the first quarter of the year.

Press Release

GM Announces First Full-Year Results as New Company

General Motors Company (NYSE: GM) today announced its calendar year 2010 results marked by $4.7 billion of net income attributable to common stockholders for its first full year of operations.

Revenue for the calendar year was $135.6 billion. Automotive cash flow from operating activities was $6.6 billion and automotive free cash flow was $2.4 billion, both reflecting the impact of a $4.0 billion voluntary cash contribution to the company’s U.S. pension plans.

“Last year was one of foundation building,” said Dan Akerson, chairman and chief executive officer. “Particularly pleasing was that we demonstrated GM’s ability to achieve sustainable profitability near the bottom of the U.S. industry cycle, with four consecutive profitable quarters.”

Fourth quarter net income attributable to common stockholders of $0.5 billion includes net charges of $0.4 billion, or a $0.21 reduction to fully diluted earnings per share, as a result of the previously disclosed $0.7 billion loss on the purchase of U.S. Treasury (UST) preferred shares, partially offset by the impact of EBIT adjustments. The company had approximately $0.3 billion in favorable EBIT adjustments including the previously disclosed $0.2 billion gain associated with the repayment of the VEBA Note, and $0.1 billion of cumulative gains on the sale of Nexteer and the purchase of the Strasbourg, France facility.

GM North America (GMNA) had EBIT in the fourth quarter 2010 of $0.8 billion, up from a loss of $3.4 billion in the fourth quarter 2009. GM Europe (GME) had a loss before interest and taxes of $0.6 billion, an improvement from a loss of $0.8 billion in the same quarter a year ago. GM International Operations (GMIO) had EBIT of $0.3 billion, down from $0.4 billion in fourth quarter 2009. GM South America (GMSA) had EBIT of $0.2 billion for the fourth quarter, compared with $0.3 billion in the same quarter a year ago. GM began reporting GMSA results as an operating segment in the fourth quarter, and has revised the segment reporting for prior periods.

Automotive net cash flow from operating activities for the fourth quarter was $(1.7) billion, which reflects a $4.0 billion voluntary cash contribution to the U.S. pension plans. After deducting $1.1 billion of capital expenditures, automotive free cash flow was $(2.8) billion.

As a result of GM’s 2010 financial performance, the company will pay profit sharing to approximately 45,000 eligible GM U.S. hourly employees, and approximately 3,000 eligible GM Components Holdings (GMCH) employees. The average payout per employee will be approximately $4,300 for GM employees and $3,200 for GMCH employees.

In addition, GM announced today that after assessing remediation actions that it put in place to address the company’s material weakness regarding the financial reporting process, the management team and Audit Committee of the Board of Directors concluded that the material weakness no longer exists as of December 31, 2010.

“Our focus for 2011 is to build on our progress and continue to generate momentum in the marketplace. We expect our first quarter will be a strong start,” said Chris Liddell, vice chairman and chief financial officer.

Topics: gm, profit

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