DETROIT – General Motors Corp. said on Wednesday its fourth-quarter earnings before one-time items dropped 58 percent due to higher marketing costs and cuts in production, but the result still beat Wall Street expectations.
GM, the world's largest automaker, said earnings fell to $255 million, or 60 cents a share, in the fourth quarter, from $609 million, or $1.15 a share, a year ago, excluding the items.
The Detroit-based automaker last week had raised its forecast for fourth-quarter earnings before charges to 60 cents per share from 50 cents, reflecting stronger-than-expected U.S. vehicle sales.
Wall Street estimates for fourth-quarter earnings had ranged from 40 cents to 76 cents, with a consensus analyst forecast of 59 cents, according to research firm Thomson Financial/First Call.
GM recorded no one-time items in the fourth quarter of 2001. In the fourth quarter of the previous year, net earnings, including a one-time charge of $520 million, totaled a profit of $89 million or a loss of $1.16 a share. The per-share loss in the year-ago quarter, despite the net profit, came because GM's Hughes Electronics Corp. unit trades as a tracking stock and GM includes all of Hughes' earnings in its own earnings but only 32.6 percent of the unit's earnings toward the parent company's per-share income.
``Our performance in 2001 was quite strong considering all the challenges we faced, and we intend to continue building momentum throughout the coming year,'' GM Chairman Jack Smith said in a statement.
Shares of Detroit-based GM closed on Tuesday at $49.96 on the New York Stock Exchange. GM shares have outperformed those of its closest rival, Ford Motor Co. , by about 25 percent since the Sept. 11 attacks on New York and Washington.
Ford, scheduled to report its earnings on Thursday, is expected to post a loss of about $5.4 billion for the year, including a fourth-quarter charge of about $4.1 billion after taxes to cover the costs of its restructuring, which includes cutting 35,000 jobs worldwide and closing up to seven North American plants.
DaimlerChrysler AG, whose Chrysler unit is also struggling to return to profitability, is scheduled to report its fourth-quarter earnings in mid-February.
Alone among the Big Three, GM managed to post a profit thanks to increased sales made by its highly profitable lineup of new trucks, such as the Chevrolet TrailBlazer and Chevrolet Suburban. Last year, GM increased its U.S. market share for the first time in a decade, in large part at the expense of Ford, particularly in trucks.
Still, GM was hit by the slowing U.S. economy and soaring consumer incentives, including the costly ``Keep America Rolling'' zero percent financing program it offered to stimulate sales after the Sept. 11 attacks.
GM said profits from its core North American automotive operations fell to $392 million in the fourth quarter from $979 million a year earlier.
The net price GM receives on the average sale of a vehicle in North America fell by 1.5 percent in the fourth quarter, reflecting the high costs of the zero percent financing program. In addition, GM cut new vehicle production in its key North American market by 5 percent during the fourth quarter.
Due to strong U.S. sales in the fourth quarter, GM repeated an earlier forecast that its North American vehicle production in the first quarter will be up 7 percent year-over-year.
The automaker said it expects the net price it receives on the sale of an average vehicle to fall by another 1 percent in the first quarter from the same quarter a year ago.
Its combined overseas automotive operations recorded a loss.
Due to the weaker results in 2001, GM said it will not issue profit-sharing payments to its hourly workers in the United States and will not pay annual incentive awards to GM executives.
GM's total sales and revenues in the fourth quarter rose to $45.95 billion from $45.00 billion in the same quarter a year ago.
GM said it now expects first-quarter earnings, excluding its Hughes unit, of about $1.00 a share, or 90 cents including Hughes. The automaker reiterated that it sees earnings for the full year 2002 of $3.00 a share, excluding Hughes, or $2.60 including the unit.
The automaker said its amount of cash, marketable securities and retiree benefit funds, excluding its Hughes unit, rose $500 million to $11.5 billion at the end of the fourth quarter. Wall Street closely watches automakers' cash levels to make sure the companies have enough to weather a downturn.