General Motors’ 2014 profit falls 26% on recall costs

If it weren’t for the recalls, 2014 would have been a stellar year for General Motors Co.

Even with $2.8 billion in pretax costs to fix more than 42 million recalled vehicles worldwide and $400 million set aside for death and injury claims, GM still managed to turn a $2.8-billion profit. It plans to raise the quarterly dividend.

Except for the recalls, most of the stars lined up last year for the Detroit automaker. Gas prices dropped more than a buck to a nationwide average of $2.26 per gallon. The U.S. economy gained steam and cheap credit was abundant.

Those factors sent buyers to GM’s newly redesigned and lucrative pickup trucks and large SUVs in North America, the company’s most profitable market. At the same time, chief competitor Ford’s truck plants were down much of the year while it switched to a new pickup with an aluminum body. GM’s global sales rose 2% to 9.9 million vehicles, a record.

Things were so good that GM said Wednesday that it plans to raise its dividend 20% next quarter to 36 cents a share, pending board approval. And the company said the dividend could go even higher this year once GM gets a better handle on recall costs.

Yes, there was trouble in Europe, Russia and South America, but GM had a good year overall.

For the full year, GM’s net income fell 26% from $3.8 billion in 2013. The company earned $1.65 a share. Excluding one-time items, GM earned $3.05 a share, beating Wall Street’s expectation of $2.64, according to FactSet. Revenue rose slightly to $155.9 billion.

In the fourth quarter, GM earned $1.1 billion, or 66 cents a share, up 21% from a year earlier.

GM shares rose $1.85, or 5.4%, to $35.83 on Wednesday.