News - General Motors
GM rings up $7.6 billion profit
North America leads the way as GM profit jumps, despite European woes
17 Feb 2012
FRESH from recovering the coveted number-one global sales crown from a battered Toyota, General Motors posted a whopping $US7.6 billion ($A7.0b) net profit in 2011 – its first full year as a public company after its near-death experience in the global financial crisis two years ago.
This was a 61 per cent improvement over 2010’s $US4.7 billion ($A4.36b), and made on bumper sales revenue of $150 million – up 11 per cent on 2010’s $135.6 billion – from the sale of more than nine million vehicles.
But GM executives kept the champagne on ice in Detroit, instead wringing their hands about the elephant in the room – Europe – where the company’s Opel and Vauxhall operations are facing continuing pain.
GM Europe dragged the financial chain again last year, losing an EBIT (earnings before interest and tax) $700 million to take the shine off the American giant’s performance, although the Euro effort at least was a $US1.3 billion improvement over 2010.
As well, GM’s South American operation also slipped into the red, making an EBIT-adjusted $100 million loss after turning in a fourth-quarter dip of $200 million.
It was left to GM’s once-ailing North American division and GM International Operations (GMIO) – a zone that includes the huge Chinese market, South Korea and Australia’s Holden – to lift the company well into the black.
Left: GM chairman and CEO Dan Akerson.
GM North America almost doubled its fourth-quarter profit – from $800 million in 2010 to a record $1.5 billion in the December quarter of 2011 – to bring home a full-year domestic profit of $7.2 billion, up from $5.7 billion in 2010.
While GMIO made a handy contribution to the bottom line with a $1.9 million full-year profit, this represented a 17 per cent fall over the previous year’s $2.3 billion.
GM chairman and CEO Dan Akerson indicated the company still had more work to do, especially in Europe and South America.
“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,” he said.
“This includes reducing our break-even level in Europe and South America and driving higher revenues around the world.” Reports out of Europe suggest more jobs and plants are on the line as GM attempts to find that elusive “break-even level” in the German-based Opel and UK-centred Vauxhall operations, which were both on the chopping block at one point at the height of the GFC.
Fresh European economic woes sparked by the debt crisis of Greece and other European nations is not expected to make the task any easier this year.
However, GM says it expects to increase its global revenue in an expanding global automotive industry, while also benefiting from improved product mix and cost containment.
GM expects to invest about $8 billion invest in new products and technologies in 2012 as it pursues its product plans.
GM senior vice president and chief financial officer Dan Ammann described the product plan as aggressive, giving “customers around the world even more reasons to purchase a General Motors vehicle”.
“Behind the scenes, we are working hard to eliminate complexity and cost throughout the organisation 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.”
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