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Europe dents GM’s profit again
General Motors remains in profit, despite rising tide of red ink flooding Europe
15 Feb 2013
GENERAL Motors’ profit plunged 36 per cent last year, partly dragged down by worsening results in Europe where the company’s losses more than doubled.
While the American giant remained firmly in the black for the third successive year, the $US4.86 billion ($A4.69b) profit for 2012 was a hefty decline from 2011’s record $US7.59 billion ($A7.32b) profit.
GM blamed unfavourable special items for most of the decline, including writing down the value of old European assets by more than $5 billion, but the showroom struggle in Europe, where GM’s brands are mired in more red ink than most, continues to weigh on the auto manufacturer’s otherwise strong performance.
The company lost $900 million in the fourth-quarter alone in Europe, compared with $500 million for the same period of 2011.
GM earned $6.95 billion in North America for its fiscal year ending December 31 – down 3.0 per cent – but its depressed European operations lead by Opel and Vauxhall reported a loss of $1.8 billion, compared with $747 million in 2011.
Global vehicle sales were up 300,000 units to 9.3 million, helping to drive a $2 billion increase in net revenue, to $152.3 billion.
Left: GM chairman and CEO Dan Akerson.
GM chairman and CEO Dan Akerson said GM had recorded a solid year.
“We grew the business, delivering a third straight year of profitability, and took significant actions to put the company on a solid path for future growth,” he said in a statement.
“This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value.” In interviews after the announcement, Mr Akerson pointed to a number of new models – including the Mokka compact SUV and Adam light hatchback – and other initiatives in Europe that he said would eventually turn the dire situation around.
"It's not like we're just hoping for the best," he said on a conference call. "We have certain levers that we can pull.
"We're going to be smart about how we cut costs. It isn't just 'close plants.' We're trying to play offense."GM’s objective is to break even in Europe by mid decade, but the company does not expect the market – the world’s third biggest – to pick up this year.
The company has signed a co-operation agreement with Peugeot Citroen PSA to share models, technologies and production facilities to cut costs in the longer term.
GM International Operations – the region that includes both China and Australia – enjoyed a lift in profit, from $1.9 billion to $2.2 billion, while South America climbed back into the black, with a $100 million rise.
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