General Motors Reports Q4 and Full Year Results (Article by The StockMarketWatch on 17.02.2012)

17 Feb
General Motors CoThree year after filing for the bankruptcy, General Motors has posted a stunning comeback as its profits surpassed what it earned during its peak in mid 1990’s.

 The Company’s earnings which stood at $7.6 billion, last year proves that how the automaker capitalized on its 2009 bankruptcy reorganization and federal bailout to get rid of loss making brands, cut down its debt, rewrite union contracts and shut down surplus factories.

 

The annual profit for 2011 showed a 62% gain over the preceding year. Revenue climbed 11% to $150.3 billion in the same period.  While the fourth-quarter profit dropped 7% to $472 million, revenue soared 3% to $38 billion.

According to  Jesse Toprak, an analyst with automotive information company TrueCar.com,  the record annual earnings symbolizes “a remarkable turnaround from what appeared to be a hopeless situation,”

Commenting on General Motors turnaround,  David Cole, chairman emeritus of the Center for Automotive Research said that  GM now has about a $2,000-per-car manufacturing advantage over its Japanese and European rivals, a huge transformation from a similar-sized disadvantage before the restructuring.

As the Company devised new business strategies, it was able to make huge profits in a market which is still much stagnated.  Even though there are still relatively low levels of auto sales in the U.S., the Company performed reasonably well thanks to concentrating on small car segment.  The Company became very competitive in the small-car business, where it now has competitive vehicles such as Chevrolet’s new Cruze and Sonic sedan. The automaker lost about $100 billion in the years before the 2009 rescue.

Globally, GM is generating strong profits in North America and China; however, it is losing money in South America and Europe. Chief Executive Dan Akerson said the Company will require the same type of overhauling; the automaker underwent to resurrect its North American operations several years ago. The Company is expected to announce its cost and production cuts in the Europe, in the coming months.

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