GM quarterly profit misses estimate, shares drop
DETROIT (Reuters) - General Motors Co posted a weaker-than-expected fourth-quarter profit on Thursday as results in North America, Asia and South America disappointed, sending shares down more than 3 percent in premarket trading.
GM Chief Financial Officer Chuck Stevens said the miss occurred because analysts did not fully account for restructuring relating to plans to close the Bochum, Germany, plant later in the year, as well as a higher-than-expected tax rate.
"Our view is that the sell-side consensus didn't comprehend that restructuring," he told reporters. "The final announcement associated with that wasn't done until early December. Due to that, we needed to book some of the restructuring costs, primarily related to the severance portion of that program."
Stevens said that while Europe was improving, the downside risk in South America was rising as Venezuela and Argentina dragged down results. The international regions outside China remained under pressure, he said.
Net income rose to $913 million, or 57 cents a share, from $892 million, or 54 cents a share, in the year-earlier quarter.
The quarter included about $200 million in special items related to the exit of the Chevrolet brand from Europe, the end of manufacturing in Australia, offset by a gain on the sale of equity in Ally Financial and other items.
Excluding the items, GM earned 67 cents a share. Analysts polled by Thomson Reuters I/B/E/S had expected 88 cents a share. The operating profit rose 58 percent to $1.9 billion.
Revenue in the quarter rose 3 percent to $40.5 billion, below the $41.08 billion analysts had expected.
GM's North American operating profit hit $1.88 billion, up from $1.14 billion a year earlier, but that fell short of the $2.04 billion expected by analysts surveyed by Reuters.
The increased profit was driven by stronger pricing for its redesigned full-size pickup trucks, the Chevrolet Silverado and GMC Sierra.
The company's international operations, which includes China, had a profit of $208 million, down from $676 million a year earlier, as businesses outside China accounted for a loss of $200 million. Analysts had expected a profit in the region of $310 million.
"It's fundamentally across the board deterioration in earnings year over year," Stevens said of the markets outside China.
South American profit of $27 million fell far short of the $151 million analysts had expected.
"The risk profile of South America has increased significantly over the last several weeks," Stevens said. "The devaluation of the peso in Argentina and fundamentally the economy is shut down in Venezuela, so that's going to be an area that we're going to have to manage through."
However, the company has not changed its financial outlook for the region at this point.
The loss in Europe not only shrunk by more than half to $345 million, but was smaller than the $399 million loss analysts had expected.
(Editing by Jeffrey Benkoe and Bernadette Baum)