General Motors reported net income of $4.9 billion for the 2012 calendar year, or $2.92 per fully diluted share. The results are down from the $7.6 billion ($4.58 per fully diluted share) the automaker earned in 2011.
General Motors is attributing the drop in profitability to unfavorable special items, with such items having a $0.5 billion, or $0.32 per share, negative impact on its bottom line. In 2011, the company recorded a favorable impact of $1.2 billion, or $0.70 per share.
Revenue during 2012 was up 1 percent year-over-year to $152.3 billion versus $150.3 billion in 2011; full-year earnings before interest and tax (EBIT) adjusted was $7.0 billion, compared to $8.3 billion in 2011. The full-year EBIT-adjusted for 2012 includes a negative $0.4 billion charge due to the impact of restructuring charges.
“We recorded another solid year in 2012 as we grew the business, delivered a third straight year of profitability and took significant actions to put the company on a solid path for future growth,” said Dan Akerson, chairman and CEO. “This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value.”
- GM North America (GMNA) reported EBIT-adjusted of $7.0 billion in 2012 compared to $7.2 billion in 2011. Based on GMNA’s 2012 financial performance, the company will pay profit sharing of up to $6,750 to approximately 49,000 eligible GM U.S. hourly employees.
- GM Europe (GME) reported EBIT-adjusted of $(1.8) billion in 2012, compared with $(0.7) billion in 2011.
- GM International Operations (GMIO) reported EBIT-adjusted of $2.2 billion in 2012 compared with $1.9 billion in 2011.
- GM South America (GMSA) reported EBIT-adjusted of $0.3 billion in 2012 compared with EBIT-adjusted of $(0.1) billion in 2011.
- GM Financial reported earnings before taxes (EBT) of $0.7 billion in 2012, compared to $0.6 billion in 2011.
Cash Flow & Liquidity
For 2012, adjusted automotive free cash flow was $4.3 billion, compared to $3.0 billion a year ago.
The automaker ended the year with automotive liquidity of $37.2 billion compared with $37.0 billion at year-end in 2011. Automotive cash and marketable securities was $26.1 billion at the end of 2012, compared with $31.6 billion in 2011.
The company expects capital expenditures for 2013 to be similar to 2012.
“We’re pleased with our fourth quarter results, as the business generated strong adjusted free cash flow and we took significant steps to strengthen our fortress balance sheet,” said Dan Ammann, senior vice president and CFO. “Our aggressive vehicle launch cadence and focus on improving the topline, combined with rigorous cost discipline will help us continue to generate strong business results moving forward.”
GM’s U.S.-only defined benefit pension plans received asset returns of 11.6 percent in 2012, ending the year 84 percent funded (16 percent underfunded, in other words). The underfunded amount totaled $13.1 billion — representing a modest improvement from 2011.
In 2012, the automaker settled roughly $28 billion of its U.S. salaried pension liability through a combination of lump sum offers and annuitizations. With current economic conditions, the company expects no mandatory contributions to its pension plans for at least five years. GM also stated in its press released that while “the company will continue to evaluate opportunities to make voluntary cash contributions, it has no current plans to do so in 2013.”
GM 2012 Earnings - OverviewIn billions, except for per share amounts
|Metric||Full-year 2011||Full-year 2012||Percent Change|
|Net income attributable to common stockholders||$7.60||$4.90||-35.53%|
|Earnings per shareÊ(EPS) fully diluted||$4.58||$2.92||-36.24%|
|Impact of special items on EPS fully diluted||$0.70||($0.32)||-145.71%|
|Automotive net cash flow from operating activities||$7.40||$9.60||+29.73%|
|Adjusted automotive free cash flow||$3.00||$4.30||+43.33%|
The GM Authority Take
Yes, The General was less profitable in 2012 than it was in 2011. On an annual basis, net income dropped a whopping 35 percent, and EPS dropped 36 percent… but that’s not taking into account the impact of special items. Taking those items into account, EBIT adjusted was down 4.82 percent.
However, the automaker is embarking on a major product offensive in 2013, one that will last through the end of the year and into 2013. Whether this will result in increased profitability remains to be seen, but if we were to play financial analysts on TV, we’d bet that GM will start to see sizable increases in profitability in 2014 or 2015, once it consolidates its global vehicle architectures and engines — thereby decreasing complexity. Keeping that in mind, making a profit is better than losing money… and this is GM’s third consecutive year of profitability, after all.