DETROIT — General Motors swung to fourth-quarter net income of just over US$2 billion, as strong North American results offset restructuring costs and losses in its international operations and autonomous-vehicle unit.
The fourth-quarter results compare to a year ago when the company reported a record operating profit of $3.1 billion (all figures in USD) for the period but a net loss of $4.9 billion due primarily to U.S. tax reform. Those results were based on continuing operations, after the company's sale of its European operations.
The company spent $1.3 billion on its ongoing restructuring in the fourth quarter, primarily employee separation charges and accelerated depreciation. GM, according to CFO Dhivya Suryadevara, expects to spend roughly $2 billion in cash overall for such actions.
For the year, net income swung to about $8 billion, from a loss of $3.9 billion in 2017.
In the fourth quarter, GM's adjusted earnings, before interest and taxes, decreased 8.3 per cent to $2.8 billion, and its global margin declined 0.8 percentage point to 7.4 per cent. Revenue increased 1.8 per cent to $38.4 billion.
For the year, the automaker's adjusted earnings, before interest and taxes, were down 8.3 per cent to $11.8 billion from 2017, while income from continuing operations increased to $8.1 billion from $348 million.
“General Motors is raking in money. Executives and shareholders continue to do incredibly well while they callously plan to take away the very livelihood of Canadian workers in Oshawa,” Unifor President Jerry Dias said in a statement.
A robust North American profit of $10.8 billion translates into average UAW profit-sharing checks of $10,750 per worker, about $1,000 less than 2017's payouts.
"The UAW Membership makes the components for and builds the finest General Motors cars, trucks, crossovers, SUVs and vans in the world right here in the U.S.A. That is the driving force behind propelling GM to make $10.769 billion in net profits in the U.S. for 2018," the UAW said in a statement on Wednesday. "Profit Sharing payments to UAW-GM Members up to $10,750 is because the UAW proposed this during negotiations; achieved it at the bargaining table and our members ratified it."
Dias told Automotive News Canada on Wednesday that Unifor remains uninterested in adopting profit sharing in Canada, saying the union prefers higher guaranteed wages.
"Our members, on average, make over $5 more per hour than they do with the UAW," he said. "So we get $10,000 more per year every year, not just during times of high profitability. I'd rather [have] a guaranteed $10,000 a year."
Suryadevara described the results as “strong,” despite outside commodity pressures, foreign exchange challenges and a volatile trade and political environment. GM, she said, was negatively impacted more than $1 billion due to changes in trade in 2018, however was primarily able to offset those costs.
GM last month advised that it would exceed its previously reported guidance of adjusted earnings $5.80 to $6.20 per share and automotive free cash flow of $4 billion.
It delivered on that promise. For the year, GM reported earnings of $6.54 per share, including $1.43 in the fourth quarter – topping Wall Street estimates of $1.25. The company's free cash flow was $4.4 billion for the year, excluding the impact of an expected $600 million payment to non-U.S. pensions in the third quarter.
For 2019, GM previously forecasted earnings of $6.50 to $7 per share and adjusted free cash flow between $4.5 billion and $6 billion.
- North American earnings increased 5.8 per cent to $3 billion in the fourth quarter. GM on Feb. 22 expects to pay up to $10,750 in profit sharing payments based on North American earnings to UAW members, down $1,000 from $11,750 in 2017.
- The company's international operations lost $48 million, down from earnings of $416 million in 2017.
- GM Financial reported earnings of $416 million, up 38 per cent from $301 million a year earlier. Fifty-six perc ent of GM’s sales in the fourth quarter were financed through GM Financial.
- Operating profit margin: The North American margin for the year was 9.5 per cent, including 10.2 per cent for the fourth quarter. It was the first time since 2014 that the company’s profit margin for the region dropped below 10 per cent.