GM Misses, Yearly Profits Up - Analyst Blog

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General Motors Company ( GM ) posted a profit of $0.7 billion or 39 cents per share in the fourth quarter of 2011, missing the Zacks Consensus Estimate by 3 cents per share. The results excluded net loss from special items of $0.2 billion or 11 cents per share. It compared with the profit of $0.9 billion or 52 cents per share in the fourth quarter of 2010.

Revenues in the quarter scaled up 3% to $38.0 billion, which was in line with the Zacks Consensus Estimate. Unit sales escalated 3% to 2.2 million vehicles from the fourth quarter of 2010. The automaker occupied a market share of 11.7% during the quarter, up from 11.5% in the year-ago quarter.

Adjusted earnings before interest and tax (EBIT) was $1.1 billion compared with $1.0 billion in the fourth quarter of 2010. Adjusted EBIT included the impact of restructuring charges of $0.3 billion.

Segment Results

GM North America (GMNA) generated revenues of $23.1 billion during the quarter, a 5% rise from the year-ago level. Adjusted EBIT increased to $1.5 billion from $0.8 billion in the fourth quarter of 2010.

GM Europe ( GME ) had revenues of $6.3 billion, a 9% decrease from the previous year quarter. The segment reported an adjusted loss of $0.6 billion in the quarter, which was flat compared with the year-ago level.

GM International Operations (GMIO) generated revenues of $7.0 billion, a 22% growth from the prior year. Adjusted EBIT was $0.4 billion in the quarter compared with $0.3 billion in the comparable quarter of 2010.

GM South America (GMSA) had revenues of $4.2 billion, a 6% dip from the prior-year quarter. The segment had an adjusted loss of $0.2 billion in the quarter compared with an EBIT of $0.2 billion in the fourth quarter of 2010.

Meanwhile, GM Financial reported an impressive 40% rise in revenues to $394 million during the quarter from $281 million in the fourth quarter of 2010. The segment recorded an adjusted EBIT of $0.2 billion during the quarter under study.

Annual Results

For full year 2011, GM reported a profit of $7.6 billion or $4.58 per share, up from $4.7 billion or $2.89 per share in 2010. It compared with the Zacks Consensus Estimate of $3.90 per share.

Revenue increased 11% to $150.3 billion from $135.6 billion in 2010. Unit sales escalated 8% to 9.0 million vehicles from 8.4 million vehicles in 2010. Adjusted EBIT in the year was $8.3 billion compared with $7.0 billion in 2010. The automaker's global market share during the year increased to 11.9% from 11.5% in 2010.

Financial Position

GM had cash and cash equivalents of $15.5 billion as of December 31, 2011 compared with $21.1 billion at the end of 2010. Total debt increased to $5.3 billion as of the above date from $4.6 billion as of December 31, 2010.

The company's automotive net cash flow was $7.4 billion in 2011, up from $6.6 billion in 2010. Capital expenditures increased to $6.2 billion from $4.2 billion in 2010.

Outlook

GM expects to boost its top-line revenue in 2012 on the back of an expansion in the global automotive industry. The company anticipates continued pricing improvement with cost inflation while product mix and pension expense are expected to be unfavorable. It forecasted capital expenditures of $8 billion in the year as it continues to invest aggressively in new products and technologies.

Our Take

GM, a Zacks #3 Rank (Hold) stock, had to seek bankruptcy protection in 2009 due to unfavorable economic conditions and a rapid decline in sales. However, the automaker recouped its sales and earnings by banking on the emerging markets, economic recovery and improved cost structure.

GM's hometown rival Ford Motor Co. ( F ) posted a 34% fall in profit to $797 million or 20 cents per share (before special items) in the fourth quarter of 2011 from $1.20 billion or 30 cents per share (before special items) in the same quarter of 2010. With this, the automaker has missed the Zacks Consensus Estimate by 7 cents per share.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: F , GM , GME

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