GM announces profits of ~$8 billion in 2011

[kaisen]

GM reports 2011 profit of $7.6 billion

General Motors today reported its earnings for last year and the fourth fiscal quarter of 2011. The automaker's profits for 2011 totaled $7.6 billion, up from $4.7 billion in 2010.

While the news was excellent for the full year, fourth quarter net income was only $472 million, or about the same as Q4 2010. While that makes eight straight quarters of positive numbers since the company emerged from bankruptcy in 2009, the earnings were weighed down by losses of $562 million in Europe from GM's Opel subsidiary.

There were also a number of one-time events that affected earnings in the fourth quarter, without which GM's profit would've nearly doubled to $900 million.

Still, the company counts 2011 as a successful year, and the stats tend to agree. TrueCar.com reports that GM increased its sales by over 13 percent, increased market share by half a point, grew average transaction prices by over $1,100 and lowered incentive spending by five percent. Based on that performance, all 47,500 hourly employees will receive profit sharing checks of up to $7,000.

[kaisen]

GM's press release:

GM Reports 2011 Net Income of $7.6 Billion

For Release: Thursday, Feb. 16, 2012, 7:30 a.m. EST

GM Reports 2011 Net Income of $7.6 Billion

•Full-year EBIT-adjusted of $8.3 billion, up $1.3 billion from 2010
•Fourth quarter net income of $0.5 billion and EBIT-adjusted of $1.1 billion

DETROIT – General Motors Co. (NYSE: GM) today announced 2011 calendar-year net income attributable to common stockholders of $7.6 billion, or $4.58 per fully diluted share, up from $4.7 billion, or $2.89 per fully diluted share, in 2010.

Revenue increased 11 percent to $150.3 billion, compared with $135.6 billion in 2010. Full-year earnings before interest and tax (EBIT) adjusted was $8.3 billion, compared with $7.0 billion in 2010.

“In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world,” said Dan Akerson, chairman and CEO. “We will build on these results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team. This includes reducing our break-even level in Europe and South America and driving higher revenues around the world.”

Overview (in billions except for per share amounts)

Q4 2010 Q4 2011 Full-year 2010 Full-year 2011

Revenue
$36.9 $38.0 $135.6 $150.3

Net income attributable to common stockholders

$0.5 $0.5 $4.7 $7.6

Earnings per share
(EPS) fully diluted
$0.31 $0.28 $2.89 $4.58

Impact of special items on EPS fully diluted
$(0.21) $(0.11) $(0.14) $0.70

EBIT-adjusted
$1.0 $1.1 $7.0 $8.3

Automotive net cash flow from operating activities

($1.7) $1.2 $6.6 $7.4

Automotive
free cash flow

($2.8) ($0.9) $2.4 $1.2


Fourth Quarter Results

Revenue in the fourth quarter of 2011 increased 3 percent to $38.0 billion, compared with the fourth quarter of 2010. GM’s fourth quarter 2011 net income attributable to common stockholders was $0.5 billion, or $0.28 per fully diluted share, including a net loss from special items of $0.2 billion or $0.11 per fully diluted share.

In the fourth quarter of 2010, GM’s net income attributable to common stockholders was $0.5 billion, or $0.31 per fully diluted share, including a net loss from special items of $0.4 billion or $0.21 per fully diluted share.

EBIT-adjusted was $1.1 billion in the fourth quarter of 2011, compared with $1.0 billion in the fourth quarter of 2010. Fourth quarter EBIT-adjusted for 2011 includes the impact of restructuring charges of $0.3 billion.

GM’s fourth quarter 2011 special items include impairment charges related to goodwill and GM’s investment in Ally Financial, and gains related to the Canadian Health Care Trust (HCT) settlement, the reversal of deferred tax asset valuation allowances in Australia and the extinguishment of debt.

Regional Results

•GM North America (GMNA) reported EBIT-adjusted of $1.5 billion in the fourth quarter of 2011 compared with $0.8 billion in 2010. Full-year EBIT-adjusted was $7.2 billion in 2011 compared with $5.7 billion in 2010. Based on GMNA’s 2011 financial performance, the company will pay profit sharing of up to $7,000 to approximately 47,500 eligible GM U.S. hourly employees. The full payout will be paid to employees who had 1,850 or more compensated hours in 2011.

•GM Europe (GME) reported an EBIT-adjusted loss of $0.6 billion in the fourth quarter of 2011, including $0.2 billion of restructuring costs, matching last year’s results. Full-year EBIT-adjusted was a loss of $0.7 billion in 2011, an improvement of $1.3 billion over 2010.

•GM International Operations (GMIO) reported EBIT-adjusted of $0.4 billion in the fourth quarter of 2011 compared with $0.3 billion in 2010. Full-year EBIT-adjusted was $1.9 billion in 2011 compared with $2.3 billion in 2010.

•GM South America (GMSA) reported an EBIT-adjusted loss of $0.2 billion in the fourth quarter of 2011, including $0.1 billion in restructuring costs, compared with EBIT-adjusted of $0.2 billion in 2010. Full-year EBIT-adjusted was a loss of $0.1 billion in 2011 compared with EBIT-adjusted of $0.8 billion in 2010.

Cash Flow and Liquidity

For the fourth quarter of 2011, automotive cash flow from operating activities was $1.2 billion and automotive free cash flow was $(0.9) billion, which includes the previously announced $0.8 billion contribution to the HCT.

GM ended the year with strong total automotive liquidity of $37.5 billion compared with $33.5 billion in 2010. Automotive cash and marketable securities was $31.6 billion compared with $27.6 billion at the end of 2010.

U.S. Pension Update

GM’s U.S. defined benefit pension plans earned asset returns of 11.1 percent in 2011. They ended the year 88 percent funded, largely unchanged from 89 percent funded a year ago.

The company also announced today that it is taking further steps toward its goals of de-risking and fully funding its U.S. pension plans. Effective Sept. 30, 2012, GM will freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan, or 401(k). This initiative will affect GM's U.S. salaried employees hired prior to Jan. 1, 2001. Salaried employees hired after that date are already covered by a defined contribution plan.

2012 Outlook

Looking forward, GM expects to increase its top-line revenue year-over-year in an expanding global automotive industry. In addition, GM expects continued pricing improvement with cost inflation well contained, while product mix and pension expense are expected to be unfavorable.
Capital spending in 2012 is expected to be in the range of $8 billion as the company continues to aggressively invest in new products and technologies.

“We are executing an aggressive product plan that will give customers around the world even more reasons to purchase a General Motors vehicle,” said Dan Ammann, senior vice president and CFO. “Behind the scenes, we are working hard to eliminate complexity and cost throughout the organization to increase margins in all of our regions, and return Europe and South America to profitability. Overall, we have made good progress and we have more work to do.”

[porsche4life]

One post says profit, one says net income.... Two totally different things. You could have a net income of 12quintillion and still be bleeding red ink....

[kaisen]

Originally Posted by porsche4life

One post says profit, one says net income.... Two totally different things. You could have a net income of 12quintillion and still be bleeding red ink....

Net income is typically synonymous with net profit. Gross profit is a completely different thing, as you point out in your statement.

[fintstone]

Does this mean they will use the money to pay back the taxpayer (or bond and shareholders in the "old" GM that lost everything)...or save it against the next time they are unprofitable so they will not need a taxpayer bailout...or will they just distribute it among themselves via "profit sharing" since the bankruptcy deal put the union on the Board of Directors?

[pwd72s]

Originally Posted by fintstone

Does this mean they will use the money to pay back the taxpayer (or bond and shareholders in the "old" GM that lost everything)...or save it against the next time they are unprofitable so they will not need a taxpayer bailout...or will they just distribute it among themselves via "profit sharing" since the bankruptcy deal put the union on the Board of Directors?

Good questions...damned good questions.

[Jim Richards]

The should have been asking those questions while former CEO Rick Wagoner and the BOD were busy cratering the company. Obviously, the bond and shareholders were OK with their ineptitude.

[jyl]

All the non-Japanese OEMs were helped in 2011 by the Japanese earthquake/tsunami and then to a smaller extent by the Thai floods. Now that Japanese production has recovered and dealer inventory is rising, the Japanese OEMs will take back some share.

So GM, and others, will have a more challenging 2012. Still, $8BN is a ton of clams, and it was earned by a company with a very strong balance sheet, so it is a good foundation to continue building on.

Enough already with the whining about old GM's shareholders and bondholders. They lost their shirt in the bankruptcy? That's how it is supposed to work.

Just like the Greece government's bondholders should take a monster haircut (a scalping, really). Nothing is perfect, but this as least is as it should have been.

[widgeon13]

Why do I not believe anything they say.

[fintstone]

No, that is not how it is supposed to work...the rules were changed to totally screw the bond and shareholders and take away their property rights. It is similar to my house on Vegas...It is upside down and I lost a lot of money on it...but it would be wrong for government to take it and give it to someone else despite my equity and leave me with nothing.

[Jim Richards]

We're not all going agree on the past re: GM & Chrysler; however, it is the past. None of us can rewind time. So, what's the point of continuing to moan about the past? Catharsis?

[pwd72s]

Originally Posted by fintstone

No, that is not how it is supposed to work...the rules were changed to totally screw the bond and shareholders and take away their property rights. It is similar to my house on Vegas...It is upside down and I lost a lot of money on it...but it would be wrong for government to take it and give it to someone else despite my equity and leave me with nothing.

Bingo! In a traditional corporate bankruptcy, bond holders get to the head of the line when assets are liquidated.

[widebody911]

Originally Posted by fintstone

but it would be wrong for government to take it and give it to someone else despite my equity and leave me with nothing.

And then the new owner posts on Pelican bragging about how adept he is at playing the housing market.

[dtw]

No.

One post says profit, one says net income.... Two totally different things. You could have a net income of 12quintillion and still be bleeding red ink....

[jyl]

If the bond holders had been willing and able to put tens of $BNs into restructuring GM, they could have gone to the front of the line. They weren't, and so they didn't. At the end of the day, they recovered roughly 30 cents on the dollar including the new GM shares they received in 2011.

Harsh reality, and everyone watching knew it would be so, if they were financially savvy enough to have any business owning the bonds in the first place.

No, that is not how it is supposed to work...the rules were changed to totally screw the bond and shareholders and take away their property rights. It is similar to my house on Vegas...It is upside down and I lost a lot of money on it...but it would be wrong for government to take it and give it to someone else despite my equity and leave me with nothing.

[fintstone]

Reality of what happened and what is supposed to happen are two different things. Much of what should have gone to investors went to the UAW.

[rick-l]

Bet engineering has a lot of pride and incentive to be working there.

The company also announced today that it is taking further steps toward its goals of de-risking and fully funding its U.S. pension plans. Effective Sept. 30, 2012, GM will freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan, or 401(k). This initiative will affect GM's U.S. salaried employees hired prior to Jan. 1, 2001. Salaried employees hired after that date are already covered by a defined contribution plan.

[kaisen]

Originally Posted by rick-l

Bet engineering has a lot of pride and incentive to be working there.

Same as working for Toyota NA, Honda NA, Hyundai NA, Porsche NA, Mercedes-Benz NA, et al...... all have 401K with match, not full-on pensions. And very few were affected in this round. Do your homework next time.

[fintstone]

According to G.A. Anderson's "Obama's General Motors [GM] Tarp Bailout - The Untold Details"

The winners and losers of the Government's plan for GM bankruptcy hearing...

1. U.S. Government buys 60% share of the New GM company for $30.1 billion - giving GM the necessary "debtor in possession" funds reserve that the court required in order to consider a Chapter 11 filing

2. The AWU's, (UAW), received a 17% ownership stake in GM, (65% in Chrysler), in lieu of the money GM owed for union health and pension commitments. At the time this equated to about 40 cents on the dollar, but in reality stock shares could be sold at levels that would not only make the health and pension funds whole - but possibly generate a profit. *Note: Unions made an initial stock sale, (a portion of their shares), right after the IPO, at a rate that generated a $4 billion profit to the funds

3. Private secured investors were given a settlement agreement at the rate of 29 cents on the dollar *Note: these "private investors" also included investment funds composed of other union pension funds, like the Federated Teachers Association - which naturally screamed murder and went to court - where they failed to find relief - looks like the Obama administration and the UAW had more clout

4. **It should be noted that established contract law required secured creditors be paid first, but Obama's administration simply ignored this leagl requirement and gave the unsecured union creditors first position - leaving whatever might be left for the secured investors.

5. Common-share stock holders were completely wiped out, when GM emerged from bankruptcy, all shares in the "old" GM were worthless since the "old" GM didn't exist anymore

6. GM was allowed to retain a $45 billion business-loss tax credit, carried forth from the "old" GM to the "New" GM - a practice unheard of in bankruptcy proceedings, essentially adding a $45 billion "gift" to off-set tax liabilities of the new company.

7. Delphi, a parts supplier network and GM spinoff, had all GM debt to it cancelled. Treasury Secretary Timothy Geithner also decided to cut pensions liabilities for salaried non-union employees to expedite GM’s emergence from bankruptcy.

[rick-l]

Originally Posted by kaisen

Same as working for Toyota NA, Honda NA, Hyundai NA, Porsche NA, Mercedes-Benz NA, et al...... all have 401K with match, not full-on pensions. And very few were affected in this round. Do your homework next time.

Remove pension benefits from current salaried employees, not new hires? Man that is cold. Bet they are pleased.