GM posts US$4.3bn loss for last year


Fri, Apr 09, 2010 - Page 10

General Motors (GM) reported a post-bankruptcy net loss for last year of US$4.3 billion on Wednesday, but said it was encouraged by the results and hoped to achieve profitability this year.

The new GM, which emerged from bankruptcy protection on July 10, said it aims to repay its government loans by June “at the latest” so it can launch an initial public stock offering “as soon as it makes sense.”

“As the results for 2009 show, there is still significant work to be done,” said Chris Liddell, GM vice chairman and chief financial officer.

But GM is very close to breaking even after making enormous strides in slashing its operating costs and improving its product portfolio, Liddell said.

“We don’t need to make that much of an improvement to get to profitability,” Liddell said in a conference call with analysts and the media.

“I’m very happy with the progress we’ve made in the first quarter,” he added, cautioning that he would “rather under-promise and hopefully over-deliver.”

The US$4.3-billion-dollar loss for the period of July 10 through December last year was primarily owing to one-off charges recorded in the fourth quarter: a US$2.6 billion settlement loss related to the United Auto Workers union retiree medical plan and a US$1.3 billion loss related to foreign exchange rates.

GM achieved global revenues of US$57.5 billion for the period and ended the year with net cash from operations of US$1 billion.

Liddell cautioned that under “fresh-start” accounting standards — which reset the valuation of assets and liabilities — the results are not directly comparable to those posted by the old GM.

The largest US automaker managed to slash its liabilities by US$83 billion as a result of the government-funded bankruptcy restructuring and ended the year with US$36.2 billion in cash and marketable securities.

Its global market share slipped to 11.6 percent from 12.4 percent in 2008, owing in part to the sale or elimination of four of its eight vehicle brands: Hummer, Saab, Saturn and Pontiac.

Its global vehicle sales fell to 7.5 million vehicles last year from 8.4 million a year earlier amid a broad economic downturn, GM said. The outlook for this year is improving. GM’s US auto sales rose 16.8 percent to 475,253 vehicles in the first quarter as its market share expanded by 0.2 points to 18.7 percent, said Autodata.

GM, which has not made a profit since 2004 and has shuttered scores of factories and laid off tens of thousands of workers, had lost US$88 billion before it sought bankruptcy protection on June 1.

The US government, which provided about US$50 billion in emergency loans, holds a 60.8 percent stake in the new company.

“We are building the foundation that will allow us to return to public ownership,” Liddell said, adding that he was “incredibly encouraged with the progress I’ve seen.”

Another key financial goal is to return the company to a “strong investment-grade credit rating,” Liddell said.

“That will likely take some years, but will provide us with the sustainable financial strength to prosper in good times and survive in tough ones,” he said.