General Motors will announces full-year 2011 and Q4 2011 financial results tomorrow morning at 10:00 am ET. The consensus on Wall Street is that The General will post a 2011 net profit in the vicinity of $8 billion, or $4.73 per share, beating its record annual profit of $6.7 billion earned in 1997 — during the peak of pickup and SUV sales boom. The 2011 profit will be the highest reported by the company in its 103-year history (not counting the “New GM” and “Old GM” technicalities). By comparison, GM made $4.7 billion, or $2.89 per share.
During the year, The General ousted Toyota as the world’s most popular automaker, having sold over 9 million vehicles all over the globe. The company has persevered through a declining U.S. auto market, with industry sales on its home turf reaching a historic low of 12.8 million vehicles in 2011.
Sales levels are expected to rise in 2012 in GM’s two biggest markets — China and the United States — a fact that could result in the company making even more money this year. However, some analysts are concerned about costs — which are likely to increase as sales grow; nonetheless, GM Authority can’t imagine that these costs will be disproportionate to the increased revenue and income associated with increased sales.
But not all will be roses and teacups, as GM is expected to report poor results at its European operations. The automaker has been restructuring Opel for the greater part of the last decade, a process that’s ongoing to this day. Currently, Opel is on the fast-track to completing its restructuring, with GM Vice Chairman Steven Girsky directly in charge of the project. Economic conditions at large in Europe were certainly of no help; passenger car registrations fell 1.7 percent in 2011 as economic uncertainty grew and government debt mounted.
Analysts also warn that the gap between The General’s U.S. pension obligations and the value of its pension funds grew during Q4 2011. At the end of September, GM pension fund assets were $8.7 billion less than its obligations. Even though the funding gap could have grown during the fourth quarter, GM can provide enough cash to fund the liability over the next several years.
The company is still partially owned by the U.S. Treasury, with the U.S. government having recouped $22.3 billion of its original $49.5 billion bailout through GM’s initial public offering. The government currently has 500 million shares on hand and would have to sell it for approximately $53 a share to recoup — in full — the remaining $27.2 billion. GM stock is currently trading at $25.
Be sure to check back to GM Authority tomorrow morning for full details of GM’s 2011 earnings.