G.M.’s Profit Rises Despite Weakness in Europe

G.M., the nation’s biggest carmaker, said it had net income of $900 million in the quarter, compared with $500 million in the same period a year earlier. Revenue increased to $39.3 billion, up from $38 billion.

The company said strong sales in the surging United States market helped it post a $1.4 billion pretax profit in North America.

But in Europe, General Motors, like many other automakers, is continuing to absorb big losses from the worst sales environment in nearly 20 years. The company said it lost $700 million in the quarter.

The company had modest success in its other international operations, reporting a $500 million profit in Asia and a net income of $100 million in South America.

The fourth quarter capped a transitional 2012 for G.M., its third full year of operations since its bankruptcy and $49.5 billion government bailout in 2009.

While it is struggling to restructure in Europe, the company is in the process of introducing several new models in the United States, including revamped versions of its highly profitable pickup trucks.

G.M. also negotiated a sale of the Treasury Department’s ownership stake in the company.

For the full year, G.M. said it had net income of $4.9 billion compared with $7.6 billion in 2011. Executives said the 2011 profit included $1.2 billion in one-time gains on asset sales.

For the year, revenue grew to $152.3 billion, up from $150.3 billion in 2011.

G.M.’s chief executive, Daniel F. Akerson, said the company had a solid year in 2012, and said its future performance would depend on growing sales with new models.

“This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value,” Mr. Akerson said in a statement.

G.M.’s big profits in North America will directly benefit its 49,000 hourly workers in the United States, each of whom will receive profit-sharing checks of up to $6,750 for their work in 2012.

G.M. made several accounting changes in the fourth quarter, the largest of which was a one-time, noncash gain of $34.9 billion to restore valuation allowances for deferred tax assets in the United States and Canada. The gain was balanced by a $26.2 million charge to erase good will tied to its North American operations, a $5.2 billion charge for impairment of European assets and a $2.2 billion charge related to its salaried pension plans.

The write-down of European assets reflected the troubled state of the company’s business on the Continent.

For 2012, G.M. had a pretax loss of $1.8 billion in Europe, which was more than double the $700 million lost the previous year. By comparison, the North American division earned a pretax profit of $7 billion in 2012, down from $7.2 billion the year before.

G.M. executives were cautious about predicting better overall results this year, particularly in Europe.

Daniel Ammann, G.M.’s chief financial officer, said the European market would continue to deteriorate this year. However, the company is sticking with its prediction that it will break even there by mid-decade.

“We feel better and better about the things we can control,” Mr. Ammann said.

Mr. Akerson said that cost cuts would continue in Europe. He said G.M. eliminated about 2,500 jobs there last year and expected the same number of cuts in 2013. He declined to say whether the company might close any more plants beyond the announced shutdown of a factory in Germany by 2016.

“We’re going to be smart about how we cut costs, and not just close plants,” Mr. Akerson said.

G.M.’s profit in the beginning of the year may be thinner than last year because of the marketing and manufacturing costs associated with selling older truck inventory and introducing the new models.

Article source: http://www.nytimes.com/2013/02/15/business/gm-hurt-by-europe-still-increases-profit.html?partner=rss&emc=rss