Connect to share and comment
General Motors reported a modest increase in quarterly profits Thursday as results were hit by restructuring costs in Europe and major investments in its booming Chinese operations.
The largest US automaker, which fully emerged from a period of partial government ownership in late 2013, posted hefty gains in its North America division.
Operating earnings in North America, the company's biggest division, rose nearly 65 percent to $1.9 billion.
But operating earnings fell sharply in South America and in the international unit that includes China, India and the Middle East. The auto giant's European losses dwindled, but they still finished the quarter in the red.
A large chunk of the weakness came from efforts to invest in GM's long-term prospects, chief financial officer Chuck Stevens said in a conference call.
GM boosted investments in the development and marketing of new products, is building new plants in China, and spent a lot to restructure its troubled European operations to operate profitably at lower volumes, Stevens said.
GM also took a $700 million hit in the fourth quarter after deciding to withdraw Chevrolet from Europe in order to focus on its Opel and Vauxhall brands.
"Launches of some of the best vehicles in our history combined with significant improvements in our core business led to a solid year," chief executive officer Mary Barra said.
"The tough decisions made during the year will further strengthen our operations. We're now in execution mode and our sole focus will be on delivering results on a global basis."
The European restructuring is already bearing fruit: Opel and Vauxhall managed to post their first market share increase in 14 years in 2013.
GM cautioned that its 2014 results will be impacted by about $1.1 billion in restructuring costs as it shutters an Opel plant in Bochum, Germany and continues to work to get its South American operations on track.
Results in the first quarter of 2014 will also be hit by high marketing costs as GM launches a wave of new products, and also by reduced production in Venezuela.
However, the automaker still expects to increase earnings this year thanks to expected growth in North America and China and cuts to operating costs worldwide.
Barra said in a conference call that the company is working to make GM profitable "wherever we do business."
"We are confident we have the team, the products and the plans in place to get it done."
Net earnings for the fourth quarter were $913 million on revenues of $40.5 billion, compared with profits of $892 million on revenues of $39.3 billion. That equates to an increase of 2.4 percent.
Earnings per share were 57 cents, including a net loss of 10 cents per share due to non-operating items. Analysts had forecast profits of 87 cents per share.
GM's revenues also fell short of the $40.96 billion forecast by analysts.
Net income for the full year 2013 was $3.8 billion, down 22.4 percent from the 2012. Revenues grew to $155.4 billion in 2013 from $152.3 billion in 2012.
After dropping sharply in morning trade, GM shares were essentially flat at $35.29 in midday trade.