GM’s Net Income Slips 37% in Quarter
Rising healthcare costs and lingering struggles in its European operations helped drive down General Motors Corp.’s profit by 37% in the fourth quarter, and the world’s biggest automaker said it expected a rough start this year.
GM officials said Wednesday that the company expected break-even or better results in the current quarter, reflecting lower vehicle production and sales of less profitable cars and trucks. They expect U.S. vehicle sales to be down slightly in 2005 from robust volume last year.
“On an earnings-per-share basis, we expect to get off to a slower-than-we’d-like start in ‘05,” GM Vice Chairman and Chief Financial Officer John Devine said. “A lot of our new products are focused around small vehicles, both small cars and small trucks.”
He said GM’s European operations were expected to get off to a slow start too, but a restructuring should result in cost savings later in the year.
In a briefing with analysts last week, GM warned of lower profit this year, in part because of higher healthcare expenses and lower anticipated results at its finance arm. The automaker has set a 2005 earnings target of $4 to $5 a share, excluding special items.
For the October-December quarter, GM earned $630 million, or $1.11 a share, compared with $1 billion, or $2.13 a share, in the fourth quarter of 2003. Revenue rose 4.7% to $51.2 billion from $48.8 billion a year earlier.
Excluding special items, GM’s income from continuing operations totaled $569 million, or $1.01 a share, in the most recent quarter, down from $838 million, or $1.47 a share, a year earlier.
The consensus forecast of analysts surveyed by Thomson First Call was for earnings of 91 cents a share before special items for the latest quarter.
GM shares fell 6 cents to $36.71 on the New York Stock Exchange after rising as high as $37.47 earlier in the session.
For all of 2004, GM earned $3.7 billion, or $6.51 a share, down from $3.8 billion, or $7.14 a share, in 2003.
Annual revenue rose 4.5% to $193 billion.
