GM books record profit two years after bankruptcy
General Motors on Thursday announced it made a record profit last year, as sales growth in the United States and China helped the Detroit firm snatch back the title of world's biggest automaker from Toyota.
Underscoring its return to rude health -- just two years after needing a massive government bailout and being dragged through a humiliating bankruptcy -- GM executives said more profits were on the way.
GM's full-year profit soared by 62 percent in 2011 to reach $7.6 billion, beating expectations and breaking records for the 103-year-old firm.
The maker of cars and trucks, whose portfolio of brands includes Chevrolet, Cadillac, Isuzu and Opel, said it would make bonus-sharing payments of up to $7,000 to US employees.
The profits appeared to provide further evidence of the success of President Barack Obama's controversial bailout for GM and Chrysler worth roughly $80 billion.
At the same time GM's continued turnaround could throw a wrench into Republican presidential hopeful Mitt Romney's bid to wrest the White House from Obama in November.
The Michigan-born candidate has slammed the bailouts as "crony capitalism on a grand scale," arguing the automakers should have been allowed to go to the wall.
He faces a key test of whether that view is shared by Michigan Republicans when they choose their party nominee on February 28.
Meanwhile GM chairman and chief executive Dan Akerson was focused on Thursday's financial win.
"We grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world," Akerson said in a statement.
"We will build on these results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team. This includes reducing our break-even level in Europe and South America and driving higher revenues around the world."
GM, which reclaimed its seven-decade reign as the best-selling global carmaker from Toyota at the end of 2011, was upbeat about the 2012 outlook.
The record annual profit came despite a flat fourth quarter.
Net income was $500 million for the final three months of 2011, the same as a year ago, hit by a net loss from special items of $200 million including a charge from its former financial arm now known as Ally.
Fourth-quarter earnings of 39 cents per share fell short of the 41 cents estimated by most analysts.
The company's trouble spots continued to be Europe, under pressure from the eurozone debt crisis, and Latin America. Losses in both regions accelerated in the final quarter, with nearly $600 million in red ink for Europe.
Akerson, in a conference call with reporters, said the company would reduce production in Europe but he did not offer details.
"We have to match capacity with demand and demand has been falling," he said, adding the situation there "is not wholly different from what it was in North America three years ago."
Investors cheered the GM results, driving shares up more than nine percent to finish the session at $27.21.
"We believe the improving credit story at GM remains intact and its quarterly performance should not delay an upgrade to investment grade during 2012," Barclays Capital analysts said in a research note.
The government still owns a 26 percent stake in GM.
© 2012 AFP