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General Motors Earns $9.7 Billion Net Income for 2015

Published on www.automobilemag.com

February 3, 2016
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General Motors, the biggest U.S. automaker and the third biggest globally based on sales, earned $2.8 billion in the fourth quarter of 2015 before interest, taxes and one-time charges, or $1.39 per share. Those results beat Wall Street estimates of $1.21 per share, according to analysts polled by Thomson Reuters. GM also posted a record profit of $9.7 billion for fiscal year 2015, up from $2.8 billion for 2014. North American operating profits hit $11 billion for 2015, a 67-percent jump from 2014, a year in which GM had to pay costs associated with safety recalls of some 30 million vehicles.
As has been the case lately, investors punished GM shares for the good news. GM shares fell 1.5 percent to $29.20, and have dropped 12 percent thus far this year. Institutional investors, who have not favored the auto industry for years, believe that the industry’s profit cycle has peaked, that sales will decline after this year’s forecasted 18 million light-duty vehicle sales, and that profits will be under pressure from labor costs and capital investment in new tech.
GM chief financial officer Chuck Stevens refuted that the automaker is not set up to maximize profits from peak sales, which he said the company expects to last beyond 2018. GM, he added, has adjusted its break-even point even if the market totally nosedives as a result of extraordinary events.

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GM said that it expects to turn a profit in Europe this year. It lost $300 million in that market in the fourth quarter. Europe, which is climbing out of recession, has long been a bad market for GM where it’s Opel and Vauxhall brands struggle for both sales and margins against Ford and other automakers. And it has no high-margin luxury business there, nor is it much of a market for full-sized pickups and SUVs.
The United States is where GM is still making a killing. Indeed, it only earned a total of $100 million outside of its home market, as losses in Europe and Latin and South America offset income gains in China.
“We continue to strengthen our core business, which is laying the foundation for the company to lead in the transformation of personal mobility,” GM CEO Mary Barra said in a statement.
GM shareholders will be rewarded with dividends if not gain in share price. The automaker said it will return a total of $16 billion to shareholders through 2017 in the way of quarterly dividends.
Workers will also be sharing in GM’’s performance. It will pay most of its 49,600 UAW-represented employees profit-sharing checks of $11,000 later this month–a record amount.