General Motors Co. said Thursday it earned $3.77 billion in 2013. General Motors CEO Mary Barra took charge of the company last month. (Paul Sancya / AP)
General Motors Co., which Thursday said it earned $3.77 billion in 2013 — down 22.4 percent from 2012 — repeated its 2014 outlook for “moderately” better profits. But the automaker also warned that first-quarter results will be lower than typical because of continued restructuring costs, particularly in Europe.
The company said its operating performance improved during 2013, but higher tax expenses and restructuring costs that together totaled $2.4 billion drove down earnings.
GM marked its 16th straight quarterly profit with $913 million earnings pre-tax in the fourth quarter, up slightly from $892 million in the same period in 2012.
Its 2013 fourth-quarter earnings per share hit 57 cents, or 67 cents when factoring special items that cost about $200 million or 10 cents a share. That 67-cent figure was 20 cents a share short of analyst expectations. GM’s new Chief Financial Officer Chuck Stevens said analysts missed restructuring costs related to closing its Bochum plant in Germany this year; GM also had a higher tax rate.
Analysts downplayed the fourth-quarter miss.
“We don’t view this as a story-changing quarter as weakness is isolated to regions where GM is aggressively restructuring throughout 2014,” Itay Michaeli, an analyst with Citi Research, wrote in an investment note.
Brian A. Johnson, an analyst with Barclays Capital Inc., said in a research note: “Like a slightly used car with significant cosmetic damage but a working powertrain, GM posted a quarter that looks worse on the outside than on the inside.”
GM in 2013 was carried by North America, where its yearly adjusted pretax earnings were best-ever at $7.46 billion, up 15.3 percent from $6.47 billion in 2012. Stevens said new vehicles such as the 2014 Chevrolet Silverado, which is commanding higher selling prices, helped North American results.
With the improvement, GM also announced profit-sharing checks of up to $7,500 for 48,500 eligible U.S. employees. Checks are scheduled to go out to employees in March. Last year, GM paid hourly workers up to $6,750.
Operating margins improved, the company reduced its underfunded pension status globally and in the U.S., and revenue jumped 2 percent in 2013 to $155.4 billion. GM’s 2013 adjusted earnings before interest and taxes totaled $8.6 billion, up 9 percent from $7.9 billion in 2012. Fourth-quarter 2013 adjusted earnings before interest and taxes jumped 58 percent to $1.88 billion, from $1.14 billion a year earlier.
GM’s new CEO Mary Barra, in a call with analysts Thursday, said she’s not satisfied with the company’s profit performance.
“We clearly have a lot of work ahead to make all of our regions solidly and consistently profitable,” Barra said. “It’s going to be a multi-year journey that will include brand building, significant reductions in material and logistics cost and overall lower fixed cost.”
GM trimmed pretax losses in Europe in 2013 to $844 million, including a loss of $345 million in the fourth quarter. The total 2013 losses are down from $1.94 billion in 2012. Stevens said GM has seen improvement in the European sales market and GM’s revenue rose in the second half of the year.
“With the cost actions that we’ve taken and an improving market, we feel very good about our mid-decade objective of breaking even (in Europe),” Stevens said.
But he warned of more restructuring costs to come for Europe this year. He told analysts that restructuring coupled with weakness in Russia likely will drive down European results in 2014 before improving.
The company’s 2013 International Operations earnings, which include its biggest sales market in China, fell to $1.23 billion pretax, from $2.53 billion in 2012. Fourth-quarter International Operations earnings fell to $208 million pretax from $676 million in the 2012 quarter.
Stevens said the company is seeing a general weakness across international regions. In some markets the problem is foreign exchange; in others, it’s pricing because of a weaker yen. Without its China results, GM would have lost $200 million in its International Operations region during the fourth quarter.
In December, GM announced it would stop selling most Chevrolet models in Europe by the end of 2015 and would stop making vehicles in Australia by 2017. “Those two actions will build a much stronger foundation going forward for improved earnings in (International Operations),” Stevens said.
He said GM continues to face challenges in Venezuela and that the risk in South America has “increased significantly over the last several weeks” with currency devaluation in Argentina and economic problems in Venezuela that has led GM to idle its plant there.
Stevens said GM’s 2014 first-quarter profits will be lower than typical due to further restructuring costs which he pegged at about $300 million in the first quarter, most related to closing its Bochum plant. He also cited higher marketing expenses for product launches and advertising in the Super Bowl and Olympics. Sales reductions in the Middle East related to launching SUVs also will be a factor. The company has announced expected $1.1 billion in total restructuring costs for 2014.
GM’s stock closed down a penny Thursday at $35.23 a share.