GM reports third consecutive year of losses after hefty charge

Source: Manufacturing Digital

Date :12/02/2008 14:52:36

General Motors suffers one of the biggest US corporate losses in history as it reports a new loss of £38.7 billion, its third consecutive year of losses, after continuing problems in North America and Europe.

GM, which narrowly retained its position as the world’s biggest carmaker from Toyota last year, reported a net loss for the year of $38.7 billion, or $68.45 a share, compared with $2 billion, or $3.50, in 2006. The massive loss was mostly due to a previously announced $38.3 billion special charge related to the valuation of deferred tax assets.

GM international

GM North America (GMNA) reported a fourth-quarter loss of $1.3 billion compared $30 million loss in 2006. GM ascribed the continuing losses in North America to the softer US market, a drive to reduce dealer inventories and lower sales to car-rental operators.

Despite this, “Our North America turnaround remains on track despite the weak U.S. economy and continued high commodity prices," Rick Wagoner, chief executive, said.

GM Europe (GME) reported a loss of $445 million in the quarter to $154 million in the year ago period. These losses were “attributable primarily to a markedly softer German market as well as unfavorable foreign exchange rates,” GM said.

Fourth quarter

For the fourth quarter, GM reported a loss of $722 million, or $1.28 a share. Excluding numerous special items, earnings fell to $46 million from $180 million. The special items included a $1.6 billion tax benefit, and a $905 million charge related to last year’s sale of Allison Transmission.

Fourth-quarter revenues fell to $47.1 billion from $50.8 billion, due to the exclusion of GMAC, the carmaker’s former financial services arm. GM sold a 51 percent stake in GMAC to Cerberus Capital Management in late 2006. Automotive revenues grew by 6.9 percent.

U.S. market

“Despite the uncertainty in the U.S. market, the company announced it expects improved pre-tax automotive earnings in 2008 versus 2007, largely driven by continued strong performance in emerging markets,” GM said.

February 12, 2008