GM General Motors Company

By Gautham Nagesh and Christina Rogers 

General Motors Co.'s fourth-quarter profit surged on a tax-related gain and amid growth in China and booming U.S. sales of pickup trucks and sport-utility vehicles, capping a record year for the nation's largest auto maker.

GM reported $6.3 billion in profit in the final three months of 2015, up from $1.1 billion a year earlier. The latest quarter included a $3.9 billion noncash gain from the revaluation of tax assets in Europe.

"It was a strong year on many fronts, capped with record sales and earnings, and a substantial return of capital to our shareholders," GM Chief Executive Mary Barra said in a statement. "We continue to strengthen our core business, which is laying the foundation for the company to lead in the transformation of personal mobility," she said Wednesday.

Still, investors haven't found a lot to cheer. GM's stock is down 21% in the past 52 weeks and trading below its 2010 initial public offering price of $33 a share. Shares were down 3.2% at $28.78 in midday trading on the New York Stock Exchange. Analysts are concerned U.S. auto sales have peaked, and gyrating markets have some on Wall Street bracing for an economic slowdown.

GM Chief Financial Officer Chuck Stevens said Wall Street is ignoring fundamental improvements in the U.S. economy and auto industry.

"We know there's a lot of concern from the capital markets on this, but we don't subscribe to that view," he said. "We believe we are well positioned for downturn, we just don't think it's going to happen any time soon."

GM said its adjusted fourth-quarter earnings per share were $1.39, up 17% from $1.19 a year earlier. The results beat Wall Street expectations of $1.21 a share.

North America sales rose 8.6% in the latest quarter, as gasoline prices below $2 a gallon and low interest rates kept consumers flocking to higher-margin trucks and SUVs. GM's retail sales in China also rose more than 14% in the period despite the country's economic woes, buoyed by a cut on the purchase tax there. Those results offset ongoing volatility in South America.

Overall fourth-quarter revenue was flat compared with a year ago at $39.6 billion.

GM earlier this year invested $500 million in ride-sharing startup Lyft Inc. and purchased assets from the latter's rival Sidecar Technologies Inc., with the eventual goal of developing a driverless-car hailing service. Equity income from GM's Chinese joint venture during the period was $572 million, up from $511 million a year ago. GM cited stronger margins in the world's largest auto market, and retail sales up 5% from a year earlier.

GM pared losses in Europe to $813 million for all of 2015 from $1.4 billion in 2014, moving closer to a goal of breaking even in the region this year. Mr. Stevens said losses stemmed from lingering effects of GM's decision to leave Russia and costs related to launching the Opel Astra, a vehicle that makes up a large chunk of the car maker's sales in the region.

Mr. Stevens said GM doesn't plan any further restructuring in Europe, noting that it feels it has the "right cost structure now" after removing the Chevrolet brand from Europe and leaving Russia altogether. Rival auto maker Ford Motor Co. on Wednesday unveiled plans to cut jobs and models in an effort to keep growing profits in the region.

"Breaking even in Europe in 2016 is a companywide focus and we're confident that we're going to achieve that," Mr. Stevens said.

In addition, Mr. Stevens pointed to the need to get better margins on small cars as cheap gasoline spurs sales of trucks and SUVs. Mr. Stevens said he wouldn't foreclose GM pursuing partners to make small cars but said the auto maker is confident it can improve returns alone for now. Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne recently said the Italian-U. S. auto maker would stop making small and midsize cars but said the company would explore joining with others to build cars.

GM's profit for 2015 rose to $9.7 billion, or $5.91 a share, from $2.8 billion or $1.65 a share, in 2014. Adjusted earnings per share was $5.02 for 2015, up 65% from $3.05 in 2014.

Total revenue for the year was $152.4 billion, down from $155.9 billion in 2014. GM said the revenue decline was primarily due to a foreign currency exchange impact of $9.3 billion.

GM reaffirmed its recent guidance for 2016 that adjusted earnings per share would be between $5.25 and $5.75. GM's eligible U.S. hourly workers will receive profit-sharing checks of $11,000 on February 26, the company said.

Write to Gautham Nagesh at gautham.nagesh@wsj.com and Christina Rogers at christina.rogers@wsj.com

(END) Dow Jones Newswires

February 03, 2016 13:16 ET (18:16 GMT)

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