General Motors Co. posted a small increase in fourth-quarter profit but its results for the period disappointed Wall Street as business deteriorated in Asia and South America and the costs of restructuring operations in Europe mounted.
The nation’s biggest automaker said its fourth-quarter net income edged up to $913 million, or 57 cents a share, from $892 million, or 54 cents, in the same period a year earlier. Revenue in the quarter rose 3% to $40.5 billion.
Earnings also were hurt by a higher-than-expected tax rate, said Chuck Stevens, GM’s chief financial officer.
For the year, GM’s profit fell to $3.8 billion, a 22% decline from the $4.9 billion of the prior year.
The full-year earnings were hurt by the expenses GM incurred in closing down its Chevrolet business in Europe and shuttering its manufacturing operations in Australia, as well as higher taxes. Revenue for the year increased 2% to $155.4 billion.
This was the first financial report for GM by Chief Executive Mary Barra, who took over the post in January.
“The tough decisions made during the year will further strengthen our operations. We’re now in execution mode and our sole focus will be on delivering results on a global basis,” Barra said.
“We have more work to do, and our sense of urgency will not let up,” Barra said. “Our plan remains the same, we need to operate profitably everywhere.”
In North America, operating profit rose 65% to $1.9 billion in the fourth quarter and full-year profit hit $7.5 billion, a company record.
“Launches of some of the best vehicles in our history combined with significant improvements in our core business led to a solid year,” Barra said.
The earnings triggered profit-sharing payments of up to $7,500 to 48,500 hourly employees in the U.S.
GM also continues to trim its losses in Europe. The automaker lost $345 million in the region in the latest quarter, down from a loss of $761 million in the same period a year earlier.
Profit plunged in its international operations to $208 million from $676 million. Stevens said the automaker was seeing a significant deterioration in its international business outside of China.
South America is turning into a trouble spot for the automaker. Profit there fell to $27 million from $135 million.
Stevens said GM was hurt by the devaluation of the peso in Argentina and a deep recession in Venezuela. But Barra said new car models being launched in Brazil this year should help the region's business.
“This year we’ll leverage our strength in the U.S. and China to execute important restructuring activities in other key global operations,” Stevens said.
GM remains on solid ground in North America and China, markets where it is poised for steady growth this year, said Alec Gutierrez, an analyst at Kelley Blue Book.
The automaker’s “biggest challenge in North America will be their approach to production and incentives, especially if industry sales volume falls short of expectations,” Gutierrez said. “Thus far, they have remained disciplined and have kept incentives in check for key models such as the new Silverado and Sierra, despite pressure from their crosstown rivals.”
In early trading, GM shares dipped 58 cents, or just under 2%, to $34.66.