General Motors posted a 27-percent jump in fourth-quarter pretax profit to $2.41 billion, despite failing to trim its losses in Europe hit by the current Russian crisis. Fourth-quarter revenue, however, dropped 2.1 percent to $39.62 billion. GM saw its losses in Europe surged to $393 million in the fourth quarter of 2014 from $365 million in the same period in 2013.
They were practically offset by stronger pricing across major markets as well as high demand for pickups and SUVs in North America. GM Chief Financial Officer Chuck Stevens said its losses in Europe were mostly due to the current economic crisis in Russia, where a depreciating ruble has caused consumers to delay or put off making large purchases like vehicles.
He said that for this year, Russia will continue to “be a headwind." Stephens remarked that the carmaker has taken and will continue to take aggressive action to mitigate those issues. For instance, GM has already laid off workers in Russia and is planning to stop operations at its St. Petersburg assembly site for nearly two months.
GM has also adjusted prices of its offerings in Russia to offset the current devaluation. For the full year 2014, GM's in Europe jumped to $1.37 billion from $899 million in 2013. Despite that, Stevens reiterated the carmaker’s target to returning its European operations to a pretax profit next year.
In December 2014, Karl-Thomas Neumann, chief of GM’s European and Opel operations, warned that its 2016 profit target could suffer from economic setbacks.
The fourth quarter pretax profit excludes around $900 million in special charges, mostly related to the redemption of outstanding preferred shares. Once the charges are accounted, net income for the period surged 21 percent to $1.11 billion.
For the full year 2014, the carmaker saw its net income fall 26 percent to $2.8 billion, no thanks to around $2.8 billion in expenses related to 84 safety recalls that covered about 30 million vehicles. It also saw its adjusted pretax profit drop 24 percent for the year to $6.49 billion.