General Motors rebounds with $8.1B 2018 profit on strong pricing

Daniel Fowler
February 8, 2019

"When GM delivers good business results, our eligible hourly employees in the US share in the company's success", Mary Barra, GM's CEO and chairman, said in a statement.

The Detroit automaker, which made $11.8 billion last year, announced profit-sharing as part of its full-year 2018 earnings report. GM made $10.8 billion in 2018, before taxes, down about 9.0 percent from 2017. The latest payment will come in the February 22 paycheck.

Since 2010, certain eligible GM U.S. hourly workers have earned more than $80,500 in profit sharing payments.

General Motors posted an $8.1 billion net profit for 2018, fueled by better prices for vehicles sold in the US, its most lucrative market.

The company says 2,200 white-collar employees took buyouts, while another 1,500 contract workers were let go.

Reuters is reporting GM will give priority in hiring to workers who were laid off at other plants.

Barra also cited the company's efforts to shift numerous affected hourly workers to other plants, lessening the impact of the cuts among blue-collar workers. The firm's quarterly revenue was up 1.8% on a year-over-year basis. Without $2.5 billion worth of special items largely due to restructuring, the profit was $6.54, easily beating Wall Street expectations of $6.29, according to a survey by FactSet. The auto manufacturer reported $1.43 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.21 by $0.22.

The company in its last quarterly report recorded $1.87 earnings per share which is above the $1.25 predicted by most analysts. The carmaker's chief financial officer (CFO), Dhivya Suryadevara, noted the success of its Cadillac vehicles in the Asian nation despite declining sales overall in China. Losses at the GM Cruise self-driving-car unit widened to $728 million last year and will probably cost the automaker $1 billion this year.

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"It's a volatile environment as you well know, and we're going to have to see how that goes", she said.

Suryadevara said there were some "early signs of stabilization" in the Chinese economy following weakness and that the company still planned 20 new launches in China in the second half of this year.

GM has invested more than $22 billion in its plants since 2009, including more than $600 million in 2018.

General Motors shares closed higher for a third consecutive trading session in NY on Wednesday. Its income from the region fell to US$307 million in the quarter from $504 million a year earlier.

GM said on Wednesday that China's $300 million in operating earnings in the fourth quarter was offset by other worldwide markets. The company had revenue of $38.40 billion during the quarter, compared to the consensus estimate of $36.31 billion.

GM thinks that it will outpace last year's performance in 2019.

Sure, GM is selling lots of expensive pickup trucks and sport utility vehicles in the US, which helped its average vehicle-sales price hit a record $36,000.

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