GM Swings to $5.2 Billion Loss on Charge Tied to Tax Changes
February 06 2018 - 8:15AM
Dow Jones News
By Mike Colias
General Motors Co. said its fourth-quarter bottom line swung to
a $5.2 billion loss because of a hefty charge related to U.S. tax
reforms, but stout demand for pickup trucks and SUVs pushed
operating profit to a record for the quarter, surpassing Wall
Street forecasts.
GM's net loss for the final three months of 2017 included a $7.3
billion noncash write-down to reflect the loss in value of deferred
tax assets held on its balance sheet. Several large companies have
reported sizable write-downs in the value of those credits against
future taxes, which fell because of the lower corporate tax rate
under federal tax overhaul.
The largest U.S. auto maker in terms of sales said
fourth-quarter operating profit excluding one-time factors rose 19%
to $3.1 billion, or $1.65 per share, easily hurdling the $1.38
average analysts' estimate.
Revenue slipped 5.5% to $37.7 billion, higher than the average
analyst forecast of $36.5 billion, bolstered by strong sales of
sport utilities in North America.
For the year, GM earned $12.8 billion in operating profit,
matching last year's record. That amounted to $6.62 per share,
above the $6-$6.50 range GM had forecast.
The company swung to a net loss for the year of $3.9 billion on
the tax-related charge and other one-time expenses related to the
August sale of its European business to French car maker
Peugeot.
GM is benefiting from heightened demand for sport utilities and
pickup trucks, which generally reap bigger profits than passenger
cars. The trend is especially helping GM, Ford Motor Co. and
Fiat-Chrysler Automobiles NV, which sell broader portfolios of
trucks and SUVs than Asian rivals.
The richer product mix is a big factor allowing GM to sustain
high profit margins even as sales in the key U.S. market edge down
after a seven-year growth spurt. Fourth-quarter North American
operating profit rose 7%, to $2.9 billion, even as production slid
about 15%, according to an estimate from WardsAuto.com.
Under terms of its United Auto Workers contract, GM said it will
cut profit-sharing checks later this month of up to $11,750 to
about 50,000 U.S. factory workers, based on the operating profit in
North America.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
February 06, 2018 08:00 ET (13:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Mar 2024 to Apr 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Apr 2023 to Apr 2024