63°GM posts its highest profit ever: $7.6 billion
Feb 16
2012
Just two years after it was rescued and reconstituted through bankruptcy and a government bailout, General Motors Co. cruised through 2011 to post the biggest profit in its history.
The 103-year-old company, leaner and smarter under new management, cut costs by taking advantage of its size around the globe. And its new products boosted sales so much that it has reclaimed the title of world's biggest automaker from Toyota.
GM may have a hard time breaking this record in 2012 because it is losing money in Europe and South America, and U.S. sales growth slowed in the last three months of 2011.
But the company's performance in North America and Asia still helped it earn $7.6 billion for the year, beating the record of $6.7 billion set during the truck boom in 1997.
The profit won't stop the debate about spending $49.5 billion in taxpayer dollars to save GM. But it did drive up the company's stock price, which could help the government get more of its money back.
The bailout of GM and Chrysler Group LLC, begun by George W. Bush and finished by Barack Obama, remains a major issue in this year's presidential campaign. It's so politically charged that even a Super Bowl ad celebrating Chrysler's rebirth caused arguments.
GM, which released its earnings Thursday, performed best in its home territory, posting a $7.2 billion pretax profit in North America. The numbers were so good that 47,500 blue-collar workers will get $7,000 profit-sharing checks, the maximum allowable under their new union contract. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down from 2010.
GM's cost cuts, and its outlook for this year helped to push up the stock price by almost 9 percent to $27.08. The company said it trimmed costs by $500 million in the fourth quarter alone mainly by consolidating advertising agencies and engineering operations. A prediction that costs wouldn't rise this year wowed investors, especially since other automakers have forecast rising costs, said Itay Michaeli, an analyst for Citi Investment Research.
"That was a very pleasant surprise," he said.
GM also was optimistic about sales and revenue. It sees its global market share holding steady at 11.9 percent, and if global auto sales rise as expected this year, GM's slice of that would also increase.
That's especially promising, since GM managed to make money last year with industry-wide sales in the U.S. at a historically low 12.8 million. Sales this year could rise to 14 million.
The company expects to charge more for its cars and trucks this year, but warned that the prices could be pressured as the market shifts toward smaller, less-expensive vehicles.
CEO Dan Akerson hinted at a better year for GM in 2012, saying that the company will build on the 2011 results as it brings more new products into the market.
"The outlook here is quite favorable for earnings growth," said Citi's Michaeli. "They're keeping their costs really under control."
That's good news for the U.S. government, which still owns 26.5 percent of the company and needs more strong earnings to push up the stock price.
The government owns 500 million shares of GM, which it got in exchange for the $49.5 billion bailout. Through earlier stock sales and loan repayments, the government has recouped about $22.3 billion of that money. The remaining shares would have to double in price and sell for around $53 for the government to get back the rest.
Despite the big annual profit and optimistic outlook, GM still lost $747 million before taxes in Europe last year, and its losses are expected to continue until a restructuring plan takes hold.
Akerson said GM will have to cut its European factory capacity to match lower sales. South America lost money, too: $122 million for the year. GM's fourth-quarter profit fell 8 percent, and its U.S. sales growth slowed in the quarter even as more Americans bought cars and trucks.
Also, GM's U.S. stockpile of cars and trucks is growing, and that could force it to offer discounts, especially in competitive market segments like pickup trucks and midsize cars. In January, GM's inventory was about 620,000, enough to supply its dealers for 89 days. That's up by more than 100,000 from a year earlier, when GM had a 68-day supply, according to Ward's AutoInfoBank.
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01:49 PM
been-there-done-that says
Not even a drop in the bucket for big oil and the middel east they make that much in a quarter. They better enjoy it cuz 4 and 5 dollar gas will pull them under just like the 2 dollar gas started.
11:56 AM
goofus says
I guess when you are owned by the government, you can get away with anything!
http://dailycaller.com/2012/02/13/obama-hikes-subsidy-to-wealthy-electric-car-buyers/
10:53 AM
goofus says
Boy, American History? You know so little of it.
01:12 PM
origen says
LOL!! Its math, Rewrite history? When it happends here just remember "Learning from the mistakes of others is the true sign of a wise man, A idiot will follow you off a cliff just to prove to himself its there" Im done your hopeless........................I take that back you have Obama's hope, Hows that working out for you?
12:45 PM
The Big Dog's back says
ori, I prefer AMERICAN history, real history, unlike you and goof trying to rewrite it.
01:17 AM
origen says
http://www.huffingtonpost.com/2011/12/22/fitch-warns-us-credit-downgrade-debt-problem-solved_n_1164972.html Guess what happens after they quit lending and start ditching the dollar? Come on you can say it. (Ill give you a hint, Were gonna get screwed)
01:07 AM
origen says
You dont seem to understand it at all and i dont have the time, The more you print the less its worth = Inflation. Simple math, Simple theory. Do some reading besides wiki, It might help you some. Look up weirmar, Zimbabwa or any of the other countless country who have seen hyper inflation caused by simply printing money.
12:44 AM
The Big Dog's back says
You meed to quit taking the rush limbaugh history class ori.
12:43 AM
The Big Dog's back says
Keynesian economics advocates a mixed economy — predominantly private sector, but with a significant role of government and public sector — and served as the economic model during the later part of theGreat Depression, World War II, and the post-war economic expansion (1945–1973), though it lost some influence following the stagflation of the 1970s. The advent of the global financial crisis in 2008 has caused a resurgence in Keynesian thought.[2]
1945-1973, best times in our country. We got away from it since 1981. Hmmmm.
11:36 PM
origen says
Do you even read the post? The way keynesian policy end up is always bad re read my post and try to understand it for once, walking you through simple ideas is getting old. Look up keynesian economic theory while your at it. God in his own words Keynes admits that it Creates inflation, A good way to steal money a "Invisible tax"
http://www.econlib.org/library/Enc/KeynesianEconomics.html
11:17 PM
The Big Dog's back says
So you are saying what we have now is Keynesian Economics? Boy, you're dumber than I thought you were.
11:01 PM
origen says
Keynesian economics always works out with those at the top imensely rich and the rest of the country destitute. The printing of money only deprecieates it and you cannot lift the poor up by giving it to them. Without a viable way of making a living i.e a job, It is unsustainable and the system crashes leaving those at the bottom worse than they were because whatever they have (No matter how much) is now worthless. Do a little research on where this has been tried and see what it does, Oh i forgot doesnt matter what you read or see you just vote for the freebies.
10:39 PM
The Big Dog's back says
Yeah, I much prefer the 1% system we have now. That's really working out isn't it?
05:39 PM
origen says
Yep, And as it is destroyed by debt the power of the currency robs the citizens of its worth. Keynes came right out and said it so why do keynesians believe in a system of economics that guarantees of government theft? When all the money that has been printed comes back it will be worthless. Why would anyone still prescribe to that system.
05:15 PM
6079 Smith W says
@ origen:
$1.00 in 1900 is now worth 4¢. Inflation is the destroyer of wealth and savings. It's the invisible tax.
Just talk to seniors who saved for their retirement and are now trying to live off of cds that are yielding next to zero.
http://www.westegg.com/inflation/
04:07 PM
origen says
Thats the problem Keynes come right out and says "Were going to rob you blind" and your dumb enough to WANT that type of economy.
02:53 PM
The Big Dog's back says
ori, glad you agree with Keynesian economics.
02:40 PM
6079 Smith W says
@ Minuteman:
"I think Obama has something to do with all this progress. "
#1. It's all part of the business cycle." http://en.wikipedia.org/wiki/Business_cycle
#2. Thank Mr. Bernanke for flooding the economy with liquidity - it's gotta go somewhere.
I'll post it again:
"If not for the Federal Reserve sopping up Treasurys as part of its effort to buoy the economy, and for domestic banks adding to their holdings to shore up their balance sheets, America would be having a much harder time funding its deficit."
http://online.wsj.com/article/SB10001424052970204059804577225501540528814.html?mod=WSJ_Heard_LEFTSecondNews
02:26 PM
origen says
"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
—John Maynard Keynes, Economic Consequences of Peace
Its comming so be prepared Unsustainable spending will cause inflation, It just takes time.
01:58 PM
Minuteman says
Add it all up. GM doing record business, economy good again, tons of new jobs. No need to ask how GM made that profit. There will be no elaboration of this story. Just remember they are doing record business and move on to the next great thing happening for America. It'll be a few days before the next big thing. I think Obama has something to do with all this progress.
10:50 PM
origen says
You have no idea what any of those mean, so i would stick to your 3 word come backs if i were you. (actually you are the example of all three so dance away )
10:15 PM
The Big Dog's back says
Should I use your language ori and call someone stupid, a dolt or a radical.
07:47 PM
origen says
Moderators have removed this comment because it contained personal attacks. Discussion Guidelines07:21 PM
The Big Dog's back says
Some day when you get up to my level ori, maybe, just maybe you will have something useful to say.
07:08 PM
gilamonster says
Normal 0So is Shanghai Automotive (owned by the Chinese government) still on track to own 36% of General Motors? So much for the UAW telling members not to shop at Wal Mart. Say anyone know where I can get one of those classic GM Daewoo Matiz with the 995cc stroker motor and 30ftlbs of torque? Barrett-Jackson is fresh out.
06:23 PM
origen says
Moderators have removed this comment because it contained personal attacks. Discussion Guidelines06:09 PM
The Big Dog's back says
ori, for a minute I thought you were talking about the right wingnut's post before mine, but of course that's how you feel too.
06:02 PM
origen says
So wheres the payback for the bailout? I mean Taxes were paid and the company survived thats great, The workers get a little bling as well. They have to Double the amount of the worth of the company and sell ALL of the stocks before anyone gets paid back anything, Sounds like the tax payers got scammed while the union and its CEO's get paid.
"Only in america could you convince people that letting them keep more of thier paycheck was costing them money that would make them get loans to cover"
05:13 PM
Ned Mandingo says
All you union haters rember this. Union workers get bonus checks when the company show record profits, thats great. Wallstreet ceo's get bonuses when they show record losses. The goverment has something to show for bailing out GM. Stocks. Fannie may and freddie mack received ten times the bailout money and have not and never will pay it back.
02:52 PM
origen says
Moderators have removed this comment because it contained personal attacks. Discussion Guidelines02:19 PM
The Big Dog's back says
Ahhh yes, right wingnuts.
01:51 PM
OhioFreebyrd says
I would rather ride a bike, than vote for that no good lying Import that we are calling president. Charles Manson would get my vote before Obama. He has lied to the people, raised our debt to trillions, and he IS NOT an American. Get the POS out of office in 2012
01:26 PM
origen says
10+ ?? If you are talking about the Debt i agree 10+ trillion added, If you are trying to predict the outcome of the election do somthing constructive and predict the lotto numbers.
"People who predict the future of election are either in on the scam or a gambleholic who hasnt figured out they race horses yet"
12:12 PM
The Big Dog's back says
Obama by 10 +.
10:11 AM
goofus says
Just thinking out loud. Gm lost 700 million in Europe, 100 million in South America but yet they have record profits? Is this the same guy who announced all loans have been repaid form other loans LOL' With10.8 billion in underfunded pensions methinks they will need another bailout
http://www.msnbc.msn.com/id/46400879/ns/business-autos/
01:03 AM
origen says
Moderators have removed this comment because it contained personal attacks. Discussion Guidelines12:29 AM
The Big Dog's back says
Obama by 8 +.
11:19 PM
digger nick says
Whats really funny is I actually have a friend who was a union worker who we all teased was like being a left wing liberal hamster on a running wheel who was pleased as punch he will be receiving a profit sharing check which exceeded the contract that the union negotiated for him, and all because he just did his job! Goodbye unions....you and (I forgot a meaningful name) are TOAST11:08 PM
The New World Czar says
"The remaining shares would have to double in price and sell for around $53 for the government to get back the rest."
If not mistaken, GM closed at a little over $27/share today. Get back to reality...they made a small step in a marathon. Give the AP credit again for over-glorification.
09:11 PM
FruGalSpender says
obamas promises on paper
09:08 PM
FruGalSpender says
"Another reason for OBAMA 2012!" the hell with him. nothing but a bass wipe in my book. what has he done. go after patriots?
08:34 PM
kURTje says
Glad the blue collar folks get some. Since I was a child I've heard many say how we (USA) help so many others worldwide.
06:09 PM
44846GWP says
Another reason for OBAMA 2012!
06:02 PM
OMG.LOL.WT_ says
Goofus, I will admit calling you goofy instead of Goofus is somewhat juvenile and I won't any more, but I would not call someone rootie, tootie, fruitie.
05:48 PM
KnuckleDragger says
@Kimo says, "
The USA is a debtor entity.
Wingnuts can put all the spin on this they want.
At the end of the day, the trade deficit gets bigger and anyone that thinks that's a good thing is a fool.
end of story"
Please tell us what your messiah has done to remedy that? Nothing!!!
End of Story
04:39 PM
origen says
http://money.cnn.com/2011/02/11/news/companies/gm_bonus/index.htm Yep you read it here first the Salaried Get bonuses, The taxpayers get screwed. Same old same old.
03:40 PM
Just Thinkin says
Not to defend GM, But check out the engine plant in Cleveland FORD has taken goverment money to expand so FORD is not without blemish ! not as much ,yet still TAX dollars , just to let all know ,Even the JAP company's have taken U S TAX BREAKS here so do not say one is without sin so to speak ! They all have used the American taxpayer and thats a fact ,Later better things to do BYE BYE
02:27 PM
gilamonster says
02:14 PM
goofus says
Rootie Tootie Frootie Brootie OMG"s response is as juvenille and inane as yours!!!!
02:08 PM
The Big Dog's back says
At least he finished school goof.