GM’s Profits Soar 67% in 4th Quarter; Record Set in 1988
General Motors Corp. today reported its fourth-quarter 1988 earnings soared 67.3% over the same period the year before, and last year’s profits set a company record, based in part on record overseas net income.
The nation’s largest auto maker said it earned $1.39 billion, or $4.25 a share, in the final three months of last year, contrasted with $836 million, or $2.36 per share, during the same time in 1987.
For all of 1988, GM said it earned $4.86 billion, or $7.17 per share, up 37% from 1987 earnings of $3.55 billion, or $5.03 a share. GM’s previous annual earnings record was $4.5 billion in 1984.
The figures for earnings per share are on the basis of a 2-for-1 stock split that was declared Feb. 6 and will be paid March 31.
Last year’s annual figures reflect the effect of a $224-million accounting change that boosted earnings, the company said.
Annual Sales Up 8.3%
Sales for the quarter amounted to $28.9 billion in 1988, up 8% from $26.4 billion during the same period in 1987. Annual sales in 1988 came to $110.2 billion, up 8.3% from $101.8 billion in 1987.
The earnings include profits announced Monday by GM’s three largest subsidiaries--General Motors Acceptance Corp., GM Hughes Electronics and Electronic Data Systems Corp.
The company said that EDS and GM Hughes earnings for 1988 were records, that GMAC’s was the second-highest in history and that the corporation’s North American operations, which have been sagging in recent years, showed increased earnings.
“Although still below desired levels of profitability, GM’s North American operations achieved substantial profit improvement and made significant progress in terms of both product competitiveness and improve operating efficiency,” GM Chairman Roger B. Smith and President Robert C. Stempel said in a news release.
Profit-Sharing Checks
Because of the North American profits, GM said, it will issue profit-sharing checks totaling $114 million for about 470,000 employees, or about $254 per employee. GM did not issue profit-sharing checks for the last two years because of slumping North American performance.
The company’s profit-sharing plan is based on U.S. car and truck sales.
Chrysler Corp. reported Feb. 2 that it earned $1.05 billion last year, and Ford Motor Co. is to report 1988 earnings later this week.
Earnings for the Big Three combined are guaranteed to set a record for 1988. GM’s and Chrysler’s combined annual profits and Ford’s net earnings through the first three quarters total $10.05 billion, breaking the Big Three’s previous annual earnings record of $9.79 billion set in 1984.
On Monday, GM Hughes, the company’s aerospace and military subsidiary, said its fourth-quarter earnings rose 16.5%. GMAC, which runs GM’s financing and mortgage operations, reported a 9.5% rise, while EDS, GM’s electronics company, had a 0.9% decrease.
