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General Motors reports record profits, but much work remains to be done

By Catholic Online (NEWS CONSORTIUM)
February 18th, 2012
Catholic Online (www.catholic.org)

General Motors posted flat fourth-quarter income this week but still managed to haul in $7.6 billion worth in profits last year, up 62 percent from the prior year. The fourth quarter is the company\'s highest annual profit ever, which rose Phoenix-like from bankruptcy protection in 2009 after a government-led bailout.

LOS ANGELES, CA (Catholic Online) - There was some dark storm clouds around the silver lining. North America led the way with a $7.2 billion pretax profit, but issues arose that could hurt future earnings. GM lost $700 million before taxes in Europe, and lost $100 million in South America.

\"We obviously have work to do still and a long way to get to the objectives we ultimately want to get to,\" GM Chief Financial Officer Dan Ammann says.

\"We clearly have work to do in Europe. We have work to do in the South America business. Frankly, we have work to do all around the company in terms of cost opportunity,\" he added.

In addition, the U.S. government still owns 26.5 percent of the company and is waiting for the share price to rise before selling in an effort to recoup the bailout money. GM stock was up 6 percent at $26.43 in midday trading after the earnings announcement.

\"We will build on these results as we bring more new cars, crossovers and trucks to market,\" CEO Daniel Akerson said in a statement.

Full-year revenue rose 11 percent to $105 billion.

Ammann said GM has far to go in cutting costs in its European operations, but declined to provide a 2012 financial forecast for a unit that the No. 1 U.S. automaker has struggled to return to profitability.

Last year, GM made the majority of its income in North America, where its pretax profit totaled $7.2 billion. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down.

GM\'s global sales rose 7.6 percent to 9.03 million vehicles in 2012 to help it reclaim the title of world\'s largest automaker from Toyota Motor Corp.

GM expects to increase its revenue as global auto sales grow and it charges more for models in 2012. The catch is that GM will make less money per vehicle as the mix of sales continues to shift to cars from trucks, which have bigger sticker prices.

GM also expects to invest $8 billion on new products and technology, and says pension expenses will rise. The company wants to keep expenses down by freezing its underfunded U.S. pension plan for salaried workers.

GM said 47,500 blue-collar workers in the U.S. will get $7,000 profit-sharing checks in March. The checks are based on North American performance and are a record for the company.

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