Resurgent General Motors posts record $7.6-billion profit for 2011
Just three years after its 2009 bankruptcy filing, the automaker surpasses what it earned during its heyday in the mid-1990s.
In earning $7.6 billion last year, the automaker demonstrated how it has capitalized on its 2009 bankruptcy reorganization and federal bailout to shed brands, slash debt, rewrite union contracts and close surplus factories.
By Jerry Hirsch, Los Angeles Times
February 16, 2012, 6:42 p.m.
Three years after nearly collapsing into liquidation, a resurgentGeneral Motors Co.has posted its best annual profit, surpassing what it earned during its heyday in the mid-1990s.
In earning $7.6 billion last year, the automaker demonstrated how it has capitalized on its 2009 bankruptcy reorganization and federal bailout to shed brands, slash debt, rewrite union contracts and close surplus factories.
The record annual earnings represented "a remarkable turnaround from what appeared to be a hopeless situation," said Jesse Toprak, an analyst with automotive information company TrueCar.com.
GM now has about a $2,000-per-car manufacturing advantage over its Japanese and European rivals, a swing from a similar-sized disadvantage before the restructuring, said David Cole, chairman emeritus of the Center for Automotive Research.
That's helped GM make huge profits at what are still relatively low levels of auto sales in the U.S. and made it competitive in the small-car business, where it now has competitive vehicles such as Chevrolet's new Cruze and Sonic sedans, Cole said. The automaker lost about $100 billion in the years before the 2009 rescue.
GM is generating strong profits in North America and China. But it is losing money in South America and Europe, where it acknowledged significant problems that Chief Executive Dan Akerson said will require the type of wrenching restructuring the automaker underwent to right its North American operations several years ago.
"We've got to look at every aspect of the business," Akerson said.
The company is expected to reveal cost and production cuts in Europe within months.
The annual profit for 2011 represented a 62% gain over the previous year. Revenue increased 11% to $150.3 billion. Fourth-quarter profit fell 7% to $472 million, while revenue increased 3% to $38 billion.
Akerson said he wants GM's profit margin of 5.5% in 2011 to grow to match that of the best-performing auto companies, which is about 10%. That would put GM on track to earn annual profits of $10 billion.
Last year's record earnings came at the same time the Detroit automaker recaptured its spot as the world's largest car seller. GM's global sales rose 7.6% to 9 million vehicles in 2011. It last held the top spot in 2007, before it was surpassed byToyota Motor Corp.the next year.
But Thursday's results showed that GM still has work to do shoring up its overseas business.
Most of the company's profit is coming from its North American operations, which produced $7.2 billion in operating income last year, up from $5.7 billion in 2010. GM accounts for about 1 out of every 5 vehicles sold in America.
Based on those financial results, GM said it would pay profit-sharing of up to $7,000 to about 47,500 U.S. hourly employees.
Europe remains the problem spot. GM lost $747 million there last year. Although that was just a third of the losses the previous year, the auto industry is expecting a difficult 2012 in Europe because of the sluggish economy there and the continuing debt crisis in Greece.
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