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General Motors Reports $4.9 Billion Profit

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General Motors Company (NYSE:GM) ended the 2012 with another positive financial performance, after achieving a net income of $0.9 billion during the fourth quarter, higher than its net income of $0.5 billion in the same period last year.

General Motors Reports $4.9 Billion Profit

The company’s revenue for the fourth quarter was $39.3 billion, a 3 percent increase from the previous quarter. The car manufacturer said its net earnings per diluted share were $0.58, up from $0.28 during the fourth quarter in 2011.

For the whole year 2012, General Motors Company (NYSE:GM) said its net profit was $4.9 billion or $2.92 per diluted share. According to the company, unfavorable special items provided negative impact on its full-year profit. Last year, the company’s net profit was $7.6 billion or $4.58 per diluted share.

Based on its financial statement, General Motors Company (NYSE:GM) incurred $699 million quarterly loss on an EBIT adjusted basis in Europe, higher than the $562 million loss a year ago. For the entire year, GM Europe recorded $1.8 billion losses compared with the $7.47 billion losses in 2011.

General Motors Company (NYSE:GM) posted a $152.3 billion revenue, a rise by 1 percent from $150.3 billion last year. The car manufacturer’s full-year earnings before interest and tax (EBIT) were $7.9 billion, down from $8.3 billion in 2011 due to the impact of restructuring charges worth -$0.4 billion.

In a statement, Dan Akerson, chairman and CEO of General Motors Company (NYSE:GM) said, “We recorded another solid year in 2012 as we grew the business, delivered a third straight year of profitability and took significant actions to put the company on a solid path for future growth. This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value.”

General Motors Company (NYSE:GM) said its automotive cash flow from operating activities for the fourth quarter was $0.5 billion. The adjusted automotive free cash flow was $1.1 billion. Its full-year free cash flow was $4.3 billion, up from $3 billion last year. According to the company, its automotive liquidity was $37.2 billion for the year 2012. Its automotive cash and marketable securities by the end of 2012 was $26.1 billion.

Dan Ammann, senior vice president and CFO of GM said the company’s aggressive launch of vehicles and the improvement of its top line products combined with rigorous cost discipline helped the company generate strong financial results. He said, “We are pleased with our fourth quarter results, as the business generated strong adjusted free cash flow and we took significant steps to strengthen our fortress balance sheet”

In a research note to investors, analysts at Morgan Stanley (NYSE:MS) believe the $5.2 billion write down in Europe will add greater non-cash D&A tailwinds into 2013. According to them, the company’s pension un-funding in the U.S. was slightly higher than expected, while its $21 billion net cash was in line with their estimate.

The analysts said, “GM’s January US retail incentives as a % appears to be the highest in several quarters. This likely continues into Feb as the company transitions to its new pick-up truck. GM miss was driven by $0.2 bn negative mix vs. our estimate of flat. This may continue.”

In addition, the analysts opined that investors were already “pretty nervous heading into the quarter” and they expect consensus to drop from its $3.50 level based on the lower 4Q base effect, negative impact from Venezuela, and the reiteration of 35% tax rate. According to them, “An entrenched GM investor may see no need to sell, while a prospective investor may see no need to rush in.”

On the other hand, analysts as Deutsche Bank commented that GM’s results were not far off from their estimates, but they do not interpret it as positive, citing a weaker-than-expected NA. They said, “It appears that 2013 GAAP P&L numbers could be a bit better than previously expected due to the impairment in Europe (not called in the prior guidance which called some earnings improvement there).”

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