General Motors has reported fourth-quarter results that beat expectations, capping its most profitable year in more than a decade after slashing costs and debt in a landmark bankruptcy.
Profit for all of 2010 was $4.7 billion, GM's first full-year profit since 2004 and its largest profit since 1999, when it earned $6 billion on booming sales of trucks and SUVs.
Separately, GM said the audit committee of its board had determined that the company's financial operations under chief financial officer Chris Liddell had remedied a 'material weakness' in financial reporting, addressing a lingering concern for investors.
The car maker said it would pay more than $200m in bonuses to hourly workers, including pay-outs of about $4,300 for each of its roughly 45,000 US factory workers represented by the United Auto Workers union.
Liddell said he expected the current quarter would represent a 'strong start' to 2011 and said the fourth quarter had been slightly ahead of GM's internal projections.
Despite the stronger than expected fourth-quarter result, analysts have raised concerns about pressure on GM profits from rising commodity prices, higher costs for launching new vehicles, and the risk of a sustained spike in oil prices.
Fourth-quarter net profit was $510m, or 31 cents per share. Earnings for the first three quarters of 2010 totalled $4.2 billion. After adjusting for a once-off charge for buying back preferred shares held by the US Treasury, fourth-quarter earnings per share were 52 cents, at the high end of Wall Street expectations.
Fourth-quarter revenue was $36.9 billion, up from $32.3 billion a year earlier. GM's European operations posted a loss of $568m for the fourth quarter and a loss of $1.7 billion for the year. The car maker has said it hopes the unit - known for its Opel brand - will break even this year.
The Detroit-based company suspended some of its vehicle development efforts as it tried to conserve cash in the run-up to bankruptcy. It faces higher costs now to revive those programs, including efforts to broaden its offering of electric cars beyond the just-released Chevrolet Volt.
GM, which had a record-setting $23 billion initial public offering of shares in November, has been seen by investors and analysts as a bet on the continuing recovery in the US car industry and fast growth in markets led by China. The US auto sector is still widely seen as being in the early stages of a recovery from its near-collapse in 2008 and the US-government funded bankruptcy of GM in 2009.
For GM to keep the US Treasury from losing on its $52 billion bail-out, the remaining 33% US government stake in the company would have to be sold at about $53 a share. The shares are trading at around $35 at the moment.
