Nimbler GM pulls largest profit ever in 2011

Nimbler GM pulls largest profit ever in 2011

February 17th, 2012 by Nick Bunkley/New York Times News Service in Business Around the Region

Assembly line worker Edward Houie moves a door into position for a 2012 Chevrolet Volt at the General Motors Hamtramck Assembly plant in Hamtramck, Mich. The U.S. economy grew at a 2.8 percent annual rate in the final three months of last year, the fastest growth in 2011, according to the Commerce Department. Americans spent more on cars and trucks, and companies restocked their shelves at the strongest pace in nearly two years. But growth in the October-December quarter - and all of last year - was held back by the biggest annual government spending cuts in four decades.

Photo by Associated Press /Times Free Press.

DETROIT - General Motors reported a big annual profit Thursday, but losses in Europe dragged down fourth-quarter earnings.

The results mean GM's hourly workers in the United States will receive profit-sharing checks next month of up to $7,000, a record.

GM said it earned a quarterly profit of $472 million, or 28 cents a share, down from $510 million, or 31 cents a share, a year ago.

It was the eighth consecutive quarterly profit for the carmaker, which cleansed much of its debt in bankruptcy two years ago, but also the smallest during that stretch.

For all of 2011, GM earned $7.6 billion, nearly all of it from North America. That was 62 percent higher than the $4.7 billion it earned a year ago and more than GM's previous record of $6.7 billion in 1997.

Revenue increased 11 percent to $150.3 billion, as sales rose and its vehicles commanded higher prices.

GM's chief executive, Daniel F. Akerson, called the year "another step in the right direction" but said the performance in Europe was not acceptable.

"Obviously, we still have a lot of work to do in some areas, and we're taking the necessary corrective actions to get the ball over the goal line," Akerson said.

GM earned $7.2 billion in North America in 2011 but lost $747 million in Europe, where it is speeding up a restructuring of its Opel.

It lost $562 million in Europe during the fourth quarter alone, as economic conditions there deteriorated.

GM's continuing restructuring plan for Europe, where it has been losing money every year for more than a decade, "was built around a more robust European economy than we face today," GM's chief financial officer, Daniel Ammann, said.

Ammann said GM would move "rapidly and decisively" to reduce its break-even point in Europe and not simply wait for the economy to improve.

Globally, fourth-quarter revenue rose 3 percent to $38 billion. GM said it expected to increase its top-line revenue in 2012 as demand for vehicles improves in the United States and elsewhere. Analysts said they expected North America to continue driving GM's profits higher as the company works to increase its margins.

"GM's new focus on balancing traditional cost controls with improved product quality is beginning to pay dividends in North America," Brian A. Johnson, an analyst with Barclays Capital, wrote in a report Thursday.