BREAKING NEWS: US [updated 14:50GMT]: GM plunges almost $10bn into red for 2005
General Motors on Thursday reported a 2005 calendar-year loss, excluding special items, of $3.4 billion, or $5.99 per share, compared with net income of $3.6 billion, or $6.37 per share, in 2004.
Including special items, GM reported a loss of $8.6 billion, or $15.13 per share for 2005, compared to net income of $2.8 billion, or $4.92 per share a year ago.
Revenue was $192.6 billion in 2005, compared to $193.5 billion in 2004.
"2005 was one of the most difficult years in GM's history, driven by poor performance in North America," GM chairman and chief executive officer Rick Wagoner said.
"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed - our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue. Our results were also dramatically and adversely affected by charges for restructuring and matters associated with Delphi Corp.'s Chapter 11 filing.
"In order to improve financial results in 2006 and 2007, we are moving quickly to implement several important actions that will address these weaknesses in North America," Wagoner added.
GM reported a loss of $1.2bn, or $2.09 per share in the fourth quarter of 2005, excluding special items. These results compare to adjusted earnings of $726m, or $1.28 per share a year ago.
Revenue was $51.2bn compared to $51.4bn a year ago.
Including special items, GM reported a loss of $4.8bn, or $8.45 per share, compared to a loss of $99m, or $0.18 per share in the fourth quarter of 2004.
The reported results for the fourth quarter of 2005 include special items totaling $3.6bn after tax, or $6.36 per share. These items are primarily attributable an after-tax restructuring charge of $1.3bn at GM North America and a preliminary after-tax charge of $2.3bn associated with the UAW/Delphi benefit guarantee.
The Associated Press said Wall Street analysts were expecting a loss of 16 cents per share on revenue of $41.7 billion in the fourth quarter, according to a survey by Thomson Financial.
Analysts forecast a loss of $4.19 per share on revenues of $158 billion for the year, AP added.
GM's noted its fourth quarter full year results are preliminary and may be revised prior to the filing of its 2005 annual report, depending on changes, if any, to the Delphi related accrual and completion of the previously disclosed supplier credits study.
GM's automotive operations reported an adjusted loss of $5.3bn in 2005, compared to adjusted earnings of $1.2bn in 2004.
The decline was principally driven by large losses in North America, partially offset by improved results in Europe and in the Latin America, Africa and Middle East region.
In the fourth quarter, GM's automotive operations reported an adjusted loss of $1.5bn compared to adjusted earnings of $268m the previous year.
GM sold 9.2m vehicles worldwide in 2005, the second-largest volume in its history, on the strength of increased sales in three of four business regions and all-time sales records in Asia Pacific and Latin America, Africa and Middle East regions.
Vehicle sales in the Asia Pacific region were up 20%, the Latin America, Africa and Middle East region increased 19%, and Europe posted a 1.3% gain. Unit sales were down 3.1% in North America in 2005. As a result, GM's share of the global automotive market was 14.2% in 2005, down from 14.4% in 2004.
GM North America (GMNA) reported an adjusted loss of $5.6bn in 2005, compared to adjusted earnings of $1.1bn in 2004, reflecting a weaker sales mix, lower production volumes stemming from a significant reduction in dealer inventories and lower market share, increased material costs including those for product improvements, continuing high health-care costs and increased spending on marketing and advertising.
In the fourth quarter, GMNA reported an adjusted loss of $1.5bn, compared to adjusted earnings of $449m in the year-ago period.
"GM's top priority is to restore our North American operations to profitability and positive cash flow as quickly as possible," Wagoner said.
GM expects to reduce its North American structural costs by $6bn by the end of 2006, with more than $4bn of the reduction coming in calendar year 2006, and to reduce its net material costs by $1bn.
In connection with the North American manufacturing capacity actions announced in November, GM recorded an after-tax charge of $1.3bn in the fourth quarter of 2005 as a special item. This charge includes approximately $800m associated with the employees at the facilities where GM plans to cease production, and about $500m for the non-cash write-down of property, plants and equipment.
GM Europe (GME) cut its losses nearly in half in 2005 to an adjusted loss of $375m from an adjusted loss of $742m in 2004, as continued improvement in both structural and material costs and higher production volumes were partially offset by negative pricing.
GME reported an adjusted loss of $159m in the fourth quarter of 2005, an improvement from the adjusted loss of $345m reported in the year-ago quarter.
"Our European turnaround plan remains on track and we expect to see more progress in 2006," Wagoner said.
GM Asia Pacific (GMAP) reported adjusted earnings of $524m in 2005, compared to $729m in 2004, reflecting unfavourable volume and shifting sales mix at GM's Holden unit, and higher costs associated with GM's growth initiatives in China.
For the fourth quarter of 2005, GMAP reported adjusted earnings of $112m, down from $117m in the fourth quarter of 2004.
GM Latin America/Africa/Middle East (GMLAAM) reported adjusted earnings of $124m in 2005, up from $85m in 2004. For the fourth quarter of 2005 GMLAAM reported adjusted earnings of $20m, compared to $47m in the year-ago quarter, primarily driven by unfavourable foreign exchange rates in Brazil.
General Motors Acceptance Corporation (GMAC) earned $2.8bn in 2005, down from record earnings of $2.9bn in 2004. In the fourth quarter of 2005, GMAC earned $614m, compared to $683m in the year-ago period.
GMAC's financing operations reported earnings of $1.1bn in 2005, down from $1.5bn in 2004. The decrease was primarily due to lower net interest margins as a result of increased borrowing costs.
The decline in net interest margins was somewhat mitigated by lower consumer credit provisions, primarily as a result of lower asset levels, and the impact of improved used vehicle prices on terminating leases.