Asia, U.S. keep GM rolling

Automaker loses in Europe but earns $4.9 billion in 2012

The assembly line is in full swing last month at the General Motors Fairfax plant in Kansas City, Kan. The automaker posted fourth-quarter gains in the U.S. and Asia, but losses in Europe.
The assembly line is in full swing last month at the General Motors Fairfax plant in Kansas City, Kan. The automaker posted fourth-quarter gains in the U.S. and Asia, but losses in Europe.

— General Motors made money in North America and Asia and lost a bundle in Europe as it nearly doubled last year’s fourth-quarter profit.

But the numbers were complicated by an array of accounting gains and losses for tax credits and devaluation of European assets.

The biggest U.S. automaker reported net income of $898 million, or 54 cents per share, compared with $468 million, or 28 cents per share, a year earlier. Revenue grew 3 percent to $39.3 billion.

The fourth-quarter profit included billions in one-time accounting gains and losses that ended up being a $100 million increase. Without the gain, the company earned 48 cents per share, falling short of Wall Street’s expectations. Analysts polled by FactSet expected earnings of 51 cents.

Its shares fell 92 cents, or 3.2 percent, to close Thursday at $27.75.

During the quarter, GM continued its recent pattern of making money in the U.S. and Asia but posting big losses in Europe as the economy there continues to cut into auto sales. GM made $1.4 billion pretax in North America, which was down $102 million from last year. But losses widened in Europe as the company has predicted, to $699 million.

GM’s International Operations, which include China and the rest of Asia, earned $473 million. The company made $99 million in South America and $146 million on its financial unit.

For the full year, GM earned $4.9 billion, or $2.92 per share.That was down from $7.6 billion, or $4.58 per share, in 2011. The difference was largely because of losses in Europe and one-time items. Excluding one-time items, GM made $3.24 per share last year. Revenue for the year rose 1 percent to $152.3 billion. The 2012 earnings beat Wall Street expectations. Analysts predicted $3.23 per share on revenue of $151.1 billion.

In the fourth quarter, GM returned roughly $35 billion in U.S. and Canadian tax credits to its books. Under accounting rules, the company must book the credits because it’s likely to use them to offset income taxes. GM has been solidly in the black for three years. But the gain largely was offset by removal of goodwill, devaluation of assets in Europe, the cost of shifting its white-collar pension plan to an insurance company annuity and the cost of buying back $5.5 billion worth of shares from the U.S. government.

Still, putting the tax credits back on the books was good news for the company because it’s a sign of good prospects, Chief Financial Officer Dan Ammann said.

“We’ve established a clear track record of profitability over the last three years,” he said. “It’s a reflection of our confidence in the fact that we’re going to generate significant profitability in the North American market going forward.”

But the change means that GM will return to a 35 percent tax rate, up from the midteens last year. It still won’t pay U.S. federal income taxes for many years because of the write-offs.

Business, Pages 32 on 02/15/2013

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