General Motors Posts Record Profit in 2011, Still Lacks in Many Areas

General Motors Posts Record Profit in 2011, Still Lacks in Many Areas
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Announcing its 2011 financial results, General Motors has reported record profits of $7.6 billion, an incredible 62 percent increase from last year. Its previous record was $6.7 billion in 1997.

Annual revenue increased by 11 percent to $150.3 billion for the American automaker and its global says jumped 7.6 percent for a total of nine million vehicles sold. In North America alone, unit’s adjusted earnings nearly doubled in 2011 to $1.5 billion.

As for GM’s international operations in the fourth quarter, profit grew by a third to a respectable $400 million.

Despite positive numbers, General Motors has also fallen remarkably short in some areas. Fourth quarter profits lacked as GM’s European business was hit with a $500 million loss, including $200 million in restructuring costs. For the year, Opel suffered a $700 million loss. GM’s initial target was to bring the figure to break-even but eventually allowed the target to drop when demand declined.

In South America, what was a $200 million profit a year market, became a $200 million loss for 2011.

Finally, GM is working hard to minimize its $24.5 billion pension shortfall, which is at least smaller than what some analysts had feared.

Stronger than expected domestic performance is only great when numbers elsewhere follow suit. Edward Jones analyst Matt Collins commented, “The good news is they’ve done a nice job getting North America back on track; the bad news is the rest of the world. In order to get the stock moving again, they really need to address international profitability and the pension.”

GM Chief Financial Officer Dan Amman answers reporters, “We obviously have work to do still and a long way to get to the objectives we ultimately want to get to. We clearly have work to do in Europe. We have work to do in the South America business. Frankly, we have work to do all around the company in terms of cost opportunity.”

However, Dan Amman did not produce select details for the 2012 financial forecast. A cause for concern, Morgan Stanley analyst Adam Jonas said in a research note, “A lack of guidance leaves GM shares shrouded in the thick fog of macro uncertainty.”

[Source: Reuters]