GM stays confident in next wave of products
General Motors remains confident it can shrink continuing losses in Europe that diluted a strong performance in North America and Asia, as the company banks on a stronger flow of new products later this year.
The automaker's pretax loss in Europe grew by 24% in the fourth quarter from a year earlier to $ 699 million. Its yearly loss in Europe, where GM wants to break even by mid-decade, more than doubled to $ 1.8 billion.
GM Chief Financial Officer Daniel Ammann said the company still expects to slightly improve its performance in Europe in 2013 despite a weakening outlook for the industry.
"What happens beyond that is going to be a function of how the European economy develops," Ammann said.
On a global basis, GM's 2012 operating profit slipped 5% to $ 7.9 billion.
For the final three months of 2012, operating profit, which excludes special accounting items, rose 14% to $ 1.25 billion for the fourth quarter.
Investors weren't thrilled, partly because of the European loss, and GM shares fell 92 cents, or 3.2% to $ 27.75, their lowest closing price since Dec. 26.
But most of the profit is coming from the U.S., Canada and Mexico, where pre-tax operating profits were $ 1.4 billion in the fourth quarter and $ 6.95 billion for the full year.
The company announced that it will issue profit-sharing checks of up to $ 6,750 to its 49,000 hourly U.S. workers.
"From every vantage point, 2012 was another solid year for General Motors," CEO Dan Akerson said in a conference call. "We planted the seeds of growth in every region around the world."
The world's second-biggest automaker will soon begin selling redesigned versions of the Chevrolet Silverado and GMC Sierra pickups and the Chevrolet Impala sedan. The Buick Encore compact crossover recently hit the market and a redesigned Cadillac CTS will be released this fall. The redesigned Chevrolet Corvette Stingray will hit showrooms in the third quarter, although it won't be sold in high volumes.
GM's net income in 2012 fell 36% to $ 4.9 billion from a year earlier, although it would have been about $ 500 million higher if unusual taxation and other accounting changes were excluded.
"An entrenched GM investor may see no need to sell, while a prospective investor may see no need to rush in," Morgan Stanley analyst Adam Jonas said in a research note.
Akerson said GM will accelerate the launch of new models.
"Between 2013 and 2016 we will refresh our North American portfolio at twice the rate we did the last three years," Akerson said.
He also confirmed that GM probably won't appoint a new global chief marketing officer, choosing instead to rely on individual global brand marketing chiefs.
GM's revenue rose 3% for the quarter to $ 39.3 billion and 1% for the year to $ 152.3 billion.
In the automaker's international operations, which include the critical Chinese market, pre-tax income rose 27% for the quarter to $ 473 million and 15% for the year to $ 2.2 billion.
GM's U.S. market share fell from 19.2% in 2011 to 17.5% in 2012. It slipped in the fourth quarter to 17.1% from 18% a year earlier.
"We have a really strong year of product introductions around the world in 2013," Ammann said.
Barclays analyst Brian Johnson said GM won't reap the full benefits of the new products until next year.
"We maintain our view that '14 is the sweet spot for GM, as we expect GM to benefit from multiple product improvements," Johnson said in a research note.
GM added 3,000 U.S. employees from the end of 2011 to the end of 2012 for a total of 80,000. GM had 213,000 employees worldwide at the end of 2012, up from 207,000 a year earlier.
As GM seeks to reduce its pension obligations, the company will consider changes to its retiree payment structure, possibly including lump-sum payments to UAW retirees, executives said. In 2012, GM offered pension buyouts to its U.S. salaried retirees. There have been conversations with the UAW about making a similar offer to hourly retirees.
"We will still act if something interesting comes along," Ammann said.
GM had several unusual items in the fourth quarter of 2012, but the net effect was a boost in net income by about $ 100 million.
Contact Nathan Bomey: 313-223-4743 or nbomey@freepress.com
More Details: Buffett to buy Heinz
NEW YORK â€" Billionaire Warren Buffett, the most closely watched investor in America, is putting his money in ketchup, agreeing to buy H.J. Heinz for $ 23.3 billion in the richest deal ever in the food industry.
For his money, the Oracle of Omaha gets one of the nation’s oldest and most familiar brands, one that’s in refrigerators and kitchen cupboards all over the U.S.
The deal is intended to help Heinz accelerate its expansion from a dominant American name into a presence on grocery shelves worldwide. The Pittsburgh-based company also makes Classico pasta sauces and Ore-Ida potatoes, as well as a growing stable of sauces suited to regional tastes around the world.
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