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Number crunch for GM
General Motors announces a 2005 loss of $US10.6 billion - $US2b worse than forecast
24 Mar 2006
THE world’s biggest car-maker General Motors has revealed that its 2005 loss was $US2 billion ($A2.8 billion) worse than reported.
The American manufacturer has blamed charges related to factory job cuts, its finance arm GMAC and the bankruptcy of its former subsidiary Delphi Corp.
In a statement released last week, GM said it now estimates that it lost about $US10.6 billion last year, compared to its preliminary loss report of $8.6 billion.
Reuters reports that the news sent GM shares crashing 4.5 per cent last week, shaving more than $US500 million off its market value. It also represented almost 85 per cent of the current stock market value of the top US vehicle-maker at the close of trade last Thursday.
At $US18.69 a share, the loss was also just shy of GM’s closing price at the end December after a year-long slide that cut the stock’s value by more than half.
However, earlier this week the price had recovered slightly to $US20.85.
Despite the dip, GM shares have gained almost 16 per cent this month, a sign that the company was making progress in its turnaround efforts.
GM said its mortgage-related accounting problem would not change reported net income, but could change its statement of cash flows at ResCap, GMAC and the parent company.
Among the revisions, GM said it was taking a $US1.7 billion charge as it shuts factories and stands-down workers, up from an initial $1.4 billion for that sweeping restructuring.
The Detroit-based company has been slashing costs and cutting capacity as it adjusts to an eroding market share because of Asian rivals in its core US market.
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