Weak Sales Put the Brakes on GM Earnings

Hit by sagging overseas sales and a weakening U.S. auto market, General Motors Corp. said Wednesday that its fourth-quarter earnings plunged 51%. The world’s biggest auto maker said it expects to be only “marginally profitable” this quarter.

GM said earnings declined to $609 million, or $1.15 a share, from $1.26 billion, or $1.95 a share, in the year-ago period. Sales fell 2.8% to $45 billion.

The latest results exclude special charges, including $939 million for GM’s planned phaseout of the Oldsmobile brand and $713 million for auto production cutbacks in North America and Europe. GM posted a gain of $1.13 billion from the sale of its Hughes satellite system to Boeing, and its Hughes Electronics arm earned $1 billion, largely from expansion of its DirecTV satellite service.

But GM’s North American auto business lost $254 million in its fourth quarter--excluding the special charges--and the company lost $463 million in Europe and $107 million in its Asia-Pacific operations, mainly because of losses at Isuzu Motors, GM’s Japanese affiliate.

Like other auto makers, GM expects total U.S. auto sales to slow to between 16 million and 16.5 million vehicles this year--down from a record 17.4 million in 2000.

Previously announced production cuts are expected to cut deeply into first-quarter earnings.

For the year, GM earned $4.45 billion, or $6.68 a share, down 20% from $5.58 billion, or $9.18 a share, a year earlier. Revenue of $184.6 billion was up 4.5% from $176.6 billion in 1999.

GM stock lost 88 cents to close at $54.88 on the New York Stock Exchange.