General Motors Co. reported a weaker-than-expected fourth-quarter profit on Thursday, citing wider losses in Europe and lower vehicle prices in its core North American market.
The largest U.S. auto maker also took an accounting change in the quarter intended to signal confidence that it will continue to be profitable in coming years.
GM posted a profit of 48 cents (U.S.) per share before one-time items, 3 cents shy of what analysts polled by Thomson Reuters I/B/E/S had expected.
Losses in Europe totalled $699-million in the quarter and $1.8-billion for all of 2012, more than doubling from 2011, reflecting the rapid deterioration of vehicle demand and economic conditions in the region. It was the 13th straight year of losses in Europe.
Chief Financial Officer Dan Ammann said GM still sees industry sales in Europe declining in 2013 and is “not betting on” a pickup later in the year.
During the fourth quarter, prices also fell in North America, GM’s most profitable region, as the company offered incentives to cut through its inventory of trucks on dealer lots.
“The (decline in price) is essentially setting up to work through some of the inventory of some of the products that are getting replaced in the marketplace,” Ammann told reporters.
Last year was GM’s second full year as a public company since its initial public offering in the autumn of 2010, which followed the bankruptcy restructuring and $50-billion U.S.-taxpayer bailout of the prior year.
Net income in the fourth quarter rose to $892-million, or 54 cents a share, from $472-million, or 28 cents a share, a year earlier.
The quarter included a $34.9-billion reversal of a tax reserve on U.S. and Canadian deferred tax assets. The move, which rival Ford Motor Co. made in late 2011, reflects confidence in GM’s business going forward.
GM also took an associated noncash goodwill asset impairment charge of $26.2-billion, wrote down $5.2-billion worth of assets in Europe, and took a charge of $2.2-billion for its action last summer to cut its U.S. salaried pension obligation.
The auto maker also wrote down $220-million, or about half, of its investment in French alliance partner PSA Peugeot Citroen. GM, which paid $423-million for its 7 per cent stake in Peugeot, warned last August it might take such an action due to the deepening fiscal crisis in Europe.
Ammann said on Thursday GM had no plans to provide additional funds to Peugeot. “We have no intention of putting more cash into Peugeot,” he said.
GM’s revenue in the fourth quarter rose 3 per cent to $39.3-billion, above the $39.15-billion analysts had expected.
For all of 2012, GM earned $4.9-billion, down from a record $7.6-billion in 2011 due to higher tax rates and weakness in Europe. The results in 2011 included $1.2-billion in favourable items related to asset sales, while 2012 had $500-million in unfavourable items.