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Business Title: GM Annual Profit of $9.19 Billion Largest in Automaker’s 103-Year History General Motors Co. (GM), which regained the global auto sales lead, earned $9.19 billion last year, the largest profit in its 103-year-history, while its European business again lost money. Fourth-quarter net income attributable to stockholders slid 48 percent to $725 million, the lowest in two years. GM had earned more than $2 billion in each of the three previous quarters. Profit in the fourth quarter fell 25 percent to 39 cents a share, trailing the 41-cent average estimate of 17 analysts surveyed by Bloomberg. GM North America earnings before interest and taxes more than tripled for the year to $7.19 billion on improved U.S. sales. The automaker’s Europe business, including the Opel brand, lost $747 million for the year. While that’s better than Europe’s restated $1.95 billion loss in 2010, it’s not break- even as GM had planned until November. “GM’s results in Europe certainly dampen the positive results in the U.S. but you have to still say they had a really good year,” Rebecca Lindland, an industry analyst with IHS Automotive, said before the results were released. Before a government-backed bankruptcy in 2009, “they were making record losses, so they’ve made a tremendous amount of progress.” GM global sales rose 7.6 percent last year to 9.03 million to outsell Toyota Motor Corp. (7203) as the world’s top-selling automaker. GM lost the sales crown in 2008 to Toyota. The shares rose 4.1 percent to $25.95 at 10:18 a.m. New York time. ‘Growth Story’ GM’s full-year profit in 2010 of $6.17 billion had been the automaker’s largest annual income since its predecessor earned $6.7 billion in 1997, excluding profit in 2009 to account for its post-bankruptcy recapitalization. “This in my mind for the next couple years is a true growth story with some hiccups along the way in Europe, but tell me anyone who’s not facing issues in Europe,” Sarat Sethi, a New York-based portfolio manager at Douglas C. Lane & Associates, said in a Bloomberg Television interview. “We clearly have work to do in Europe,” Chief Financial Officer Dan Ammann told reporters at GM’s headquarters in Detroit. “We have work to do in the South America business. Frankly we have work to do all around the company in terms of cost opportunities.” Profit Sharing GM announced it will pay profit-sharing bonuses of as much as $7,000 to 47,500 eligible UAW members under a formula negotiated last year as part of a four-year labor contract. A year ago, the automaker paid a record $4,300 on average to U.S. union workers. U.S. salaried workers’ bonus payout will decrease to 86 percent of the target for 2011 from 145 percent a year earlier, Katie McBride, a GM spokeswoman, said in a telephone interview. Chief Executive Officer Dan Akerson wants to reduce costs to improve GM’s EBIT margin, which lags behind that of Ford Motor Co. (F), Volkswagen AG (VOW) and Hyundai Motor Co. Revenue in the fourth quarter increased to $38 billion from $36.9 billion a year earlier, the company said. For 2011, revenue increased to $150.3 billion from $135.6 billion. GM boosted U.S. sales last year by 13 percent while reducing incentive spending per vehicle by 5.1 percent to $3,223, according to researcher Autodata Corp., based in Woodcliff Lake, New Jersey. Problems in Europe “You’ve got a great turnaround going on in the United States that’ll continue to get better, especially in 2013,” David Whiston, an analyst with Morningstar Inc. in Chicago, said. “I’ve been telling clients 2012, still think of it as a transition year for the new GM to get totally up to speed, because they still have holes in their product lineup, most notably full-size pickups.” In Europe, where GM hasn’t recorded an annual profit for more than a decade, the average of the industry analysts’ estimates was for the fourth-quarter loss to increase to $358 million from a deficit of $292 million in the third quarter. GM Europe lost $562 million in the fourth quarter, little changed from a loss of $568 million a year earlier. Last quarter’s loss included about $200 million in restructuring costs that weren’t reflected in the estimates. “The industry is over capacity,” Ammann said of Europe. GM is working on “the pieces of our business that we can control, working with all of our partners to get to the right answer overall.”
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