General Motors posts record profit

General Motors posts record profit

General Motors rode sales of SUVs and pickup trucks in North America to a record profit in 2015, and reaffirmed its forecast to do better this year despite signs that vehicle sales are hitting a peak.

GM, the biggest US automaker and No. 3 globally by sales, earned $2.8 billion in the fourth quarter before interest, taxes and one-time items, or $1.39 per share.

Wall Street expected $1.21 per share, according to analysts polled by Thomson Reuters. Revenues were flat at $39.6 billion, it said on Wednesday.

GM affirmed an earlier forecast that it will increase earnings per share, excluding one-time items, to $5.25 to $5.75 this year, from $5.02 a share in 2015. GM posted a record net profit of $9.7 billion for 2015.

GM stock fell 1.5 per cent to $29.20, and has dropped 12 per cent so far this year factoring in Wednesday’s early losses. Other automaker shares also lagged broader market indices, reflecting investor fears that the industry’s profit cycle has peaked.

“We are well positioned for a downturn,” Chief Financial Officer Chuck Stevens said. “We don't think it’s going to happen any time soon.”

Net income for the fourth quarter was $6.3 billion, or $3.92 a share, including a noncash gain of $3.9 billion from the revaluation of certain tax assets in Europe.

The gain reflected GM’s expectation that it will break even in Europe this year. GM lost $300 million in Europe in the fourth quarter.

Stevens said breaking even in Europe this year “is a companywide focus.” He said GM has already restructured and now “we’ve got the right cost structure.”

GM’s primary rival, Ford Motor, turned a profit in Europe in 2015, and on Wednesday said it was slashing white-collar jobs and revamping its model lineup on the continent, reducing costs by $200 million.

GM generated nearly all of its profits in North America. Outside of the region, auto operations earned about $100 million, as losses in Europe and international markets outside China offset $600 million in income from joint ventures in China. GM broke even in South America in the quarter.

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