Resurgent General Motors posts record profit for 2011
This post has been corrected. See the note at the bottom for details.
Three years after nearly collapsing into liquidation, a resurgent General Motors Co. posted its best annual profit ever.
GM said Thursday it earned $7.6 billion last year, a 62% gain over the prior year. Revenue increased 11% to $150.3 billion. In the fourth quarter, GM said, profits fell to $472 million from $510 million in the same period a year earlier. Revenue increased 3% to $38 billion.
The record earnings represented “a remarkable turnaround from what appeared to be a hopeless situation just three years ago,” said Jesse Toprak, an analyst with automotive information company TrueCar.com.
GM once dominated the global auto industry, but for years churned out vehicles that sold at a loss to keep production lines running and to honor union employment contracts. When the recession hit, the company toppled into bankruptcy and was in danger of liquidation prior to a massive bailout by the federal government. GM lost about $100 billion in the years before the 2009 bankruptcy and bailout, but has been consistently profitable since the restructuring.
In the last year, GM has “advanced our global market share and made strategic investments in our brands around the world,” said Dan Akerson, the automaker’s chief executive. “We will build on these results as we bring more new cars, crossovers and trucks to market and make GM a far more efficient global team.”
The record earnings came at the same time the Detroit automaker recaptured its spot as the world’s largest car seller. GM’s global sales rose 7.6%, to 9 million vehicles in 2011. It last held the top spot in 2007, before it was surpassed by Toyota Motor Corp. the next year.
But Thursday’s results showed that GM still has work to do shoring up its overseas business.
Most of the company’s profits are coming from its North American operations, which produced $7.2 billion in operating income last year, up from $5.7 billion in the prior year.
Based on those results, GM said it will pay profit-sharing of up to $7,000 to approximately 47,500 U.S. hourly employees.
Europe remains a problem spot. GM lost $747 million there last year. Although that was just a third of the losses in the prior year, the auto industry is expecting a difficult 2012 in Europe because of the sluggish economy there and the continuing debt crisis in Greece.
“In Europe, GM must come up with a solution for the profit-draining Opel, but must maintain the extraordinary engineering and development work that goes on there,” said Michelle Krebs, an analyst with auto information company Edmunds.com.
GM also lost $122 million in South America last year, after posting operating income of $818 million in the region in the prior year.
China continues to produce profits for the automaker. Its international operations, of which China is the main component, had operating profits of $1.9 billion last year, compared with $2.3 billion in the prior year.
GM has repaid $24.1 billion of the $49.5 billion in federal government aid it received. The repayments include the proceeds from the automaker’s public stock offering. The government would have to get more than $50 a share for its remaining holdings to recoup what it put into the business. In early trading, GM shares rose $1.10, or 4%, to $26.
For the record, 3:08, Feb. 16: A previous version of this post said that GM’s 2011 annual net income was 66% higher then the prior year. The correct number is 62%