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However the huge loss mainly due to the 38 billion in deferred tax assets. read on...
Zman
GM suffers record $39bn loss
The huge annual loss was mostly due to a $39 billion third-quarter charge for unused tax credits. It topped the company's previous annual loss record, when it lost $23.4 billion in 1992 because of a change in health care accounting, according to Standard & Poor's Compustat.
GM's results also were dragged down by its 49 percent stake in GMAC Financial Services, which lost $2.3 billion last year because of its ResCap mortgage division. GM attributed a $1.1 billion loss to GMAC.
Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006 — easily beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.
GM reported $181 billion in revenues for the year, down from $206 billion in 2006. The company sold 9,369,524 vehicles worldwide, up 3 percent from the year before.
For the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi for its restructuring efforts, and a gain of $1.6 billion because of tax credits related to GM's pension liabilities and the sale of its Allison Transmission unit.
GM's North American division posted a $1.5 billion loss for the year, nearly identical to its loss in 2006. GM Europe, which saw market share losses in Germany but gains in Russia and elsewhere, managed a profit of $55 million, down from $357 million a year earlier.
The company did better in the rest of the world, with its Latin America, Middle East and Africa division more than doubling earnings to a record $1.3 billion. The Asia-Pacific division earned $744 million, up from $403 million in 2006.
GM has about 23 billion (with a B) cash on hand.
By Bernard Simon in Toronto
Published: February 12 2008 13:16 | Last updated: February 12 2008 13:16
General Motors on Tuesday reported a third consecutive year of losses in 2007, with strong earnings from emerging economies offset by continuing problems in its big North American and European operations.
The Detroit-based carmaker said that it expected an improvement in automotive operating results this year. But it indicated that the biggest push to earnings would not come until 2010 and 2011, when it reaps the full benefits of last year’s labour contract with the United Auto Workers union and an anticipated full recovery in the US vehicle market.
EDITOR’S CHOICE
GM invites green critics to join online debate - Feb-06
GMAC considers sale of troubled ResCap - Feb-05
Lex: GMAC battered - Feb-05
GM picks up speed as rivals struggle - Feb-01
Toyota gains in emerging markets - Feb-05
GM and Toyota share top carmaker crown - Jan-24
GM, which barely edged out Toyota last year to retain its position as the world’s biggest carmaker, reported a net loss for the year of $38.7bn, or $68.45 a share, compared with $2bn, or $3.50, in 2006. The massive loss was mostly due to a previously announced $38.3bn special charge related to the valuation of deferred tax assets.
For the fourth quarter, GM reported a loss of $722m, or $1.28 a share, versus income of $950m, or $1.68, a year earlier. Excluding numerous special items, earnings fell to $46m from $180m.
The special items included a $1.6bn tax benefit, and a $905m charge related to last year’s sale of Allison Transmission, a maker of truck transmissions.
Fourth-quarter revenues fell to $47.1bn from $50.8bn, due to the exclusion of GMAC, the carmaker’s former financial services arm. GM sold a 51 per cent stake in GMAC to Cerberus Capital Management in late 2006. Automotive revenues grew by 6.9 per cent.
Rick Wagoner, chief executive, said that GM was pleased with the improving trend in its automotive business, especially given challenging conditions in key markets like the US and Germany. Nonetheless, he said, “we have more work to do to achieve acceptable profitability and positive cash flow”.
GM said its projection of improved pre-tax automotive earnings in 2008 was based on higher revenues as well as more favourable pricing and costs.
The carmakers troubled North American operations reported a jump in fourth-quarter pre-tax losses to $1.3bn from $30m. GM ascribed the continuing losses in North America to the softer US market, a drive to reduce dealer inventories and lower sales to car-rental operators.
GM Europe reported a fourth-quarter loss of $445m, up from $154m a year earlier, due mainly to the weaker German market and unfavourable currency movements.
By contrast, earnings from Latin America, the Middle East and Africa reached a new record last year. Earnings from the Asia-Pacific region were also sharply higher.
GM said that the improvement in Asia-Pacific was driven by favourable volumes and vehicle mix, higher income from joint ventures in China, and an improved performance by Australia’s Holden group. But costs rose due to “continued investment in high growth markets”.
Copyright The Financial Times Limited 2008
However the huge loss mainly due to the 38 billion in deferred tax assets. read on...
Zman
GM suffers record $39bn loss
The huge annual loss was mostly due to a $39 billion third-quarter charge for unused tax credits. It topped the company's previous annual loss record, when it lost $23.4 billion in 1992 because of a change in health care accounting, according to Standard & Poor's Compustat.
GM's results also were dragged down by its 49 percent stake in GMAC Financial Services, which lost $2.3 billion last year because of its ResCap mortgage division. GM attributed a $1.1 billion loss to GMAC.
Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006 — easily beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.
GM reported $181 billion in revenues for the year, down from $206 billion in 2006. The company sold 9,369,524 vehicles worldwide, up 3 percent from the year before.
For the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi for its restructuring efforts, and a gain of $1.6 billion because of tax credits related to GM's pension liabilities and the sale of its Allison Transmission unit.
GM's North American division posted a $1.5 billion loss for the year, nearly identical to its loss in 2006. GM Europe, which saw market share losses in Germany but gains in Russia and elsewhere, managed a profit of $55 million, down from $357 million a year earlier.
The company did better in the rest of the world, with its Latin America, Middle East and Africa division more than doubling earnings to a record $1.3 billion. The Asia-Pacific division earned $744 million, up from $403 million in 2006.
GM has about 23 billion (with a B) cash on hand.
By Bernard Simon in Toronto
Published: February 12 2008 13:16 | Last updated: February 12 2008 13:16
General Motors on Tuesday reported a third consecutive year of losses in 2007, with strong earnings from emerging economies offset by continuing problems in its big North American and European operations.
The Detroit-based carmaker said that it expected an improvement in automotive operating results this year. But it indicated that the biggest push to earnings would not come until 2010 and 2011, when it reaps the full benefits of last year’s labour contract with the United Auto Workers union and an anticipated full recovery in the US vehicle market.
EDITOR’S CHOICE
GM invites green critics to join online debate - Feb-06
GMAC considers sale of troubled ResCap - Feb-05
Lex: GMAC battered - Feb-05
GM picks up speed as rivals struggle - Feb-01
Toyota gains in emerging markets - Feb-05
GM and Toyota share top carmaker crown - Jan-24
GM, which barely edged out Toyota last year to retain its position as the world’s biggest carmaker, reported a net loss for the year of $38.7bn, or $68.45 a share, compared with $2bn, or $3.50, in 2006. The massive loss was mostly due to a previously announced $38.3bn special charge related to the valuation of deferred tax assets.
For the fourth quarter, GM reported a loss of $722m, or $1.28 a share, versus income of $950m, or $1.68, a year earlier. Excluding numerous special items, earnings fell to $46m from $180m.
The special items included a $1.6bn tax benefit, and a $905m charge related to last year’s sale of Allison Transmission, a maker of truck transmissions.
Fourth-quarter revenues fell to $47.1bn from $50.8bn, due to the exclusion of GMAC, the carmaker’s former financial services arm. GM sold a 51 per cent stake in GMAC to Cerberus Capital Management in late 2006. Automotive revenues grew by 6.9 per cent.
Rick Wagoner, chief executive, said that GM was pleased with the improving trend in its automotive business, especially given challenging conditions in key markets like the US and Germany. Nonetheless, he said, “we have more work to do to achieve acceptable profitability and positive cash flow”.
GM said its projection of improved pre-tax automotive earnings in 2008 was based on higher revenues as well as more favourable pricing and costs.
The carmakers troubled North American operations reported a jump in fourth-quarter pre-tax losses to $1.3bn from $30m. GM ascribed the continuing losses in North America to the softer US market, a drive to reduce dealer inventories and lower sales to car-rental operators.
GM Europe reported a fourth-quarter loss of $445m, up from $154m a year earlier, due mainly to the weaker German market and unfavourable currency movements.
By contrast, earnings from Latin America, the Middle East and Africa reached a new record last year. Earnings from the Asia-Pacific region were also sharply higher.
GM said that the improvement in Asia-Pacific was driven by favourable volumes and vehicle mix, higher income from joint ventures in China, and an improved performance by Australia’s Holden group. But costs rose due to “continued investment in high growth markets”.
Copyright The Financial Times Limited 2008