GM posts 1st full-year profit since 2004

In an impressive comeback from bankruptcy, General Motors last year posted its first annual profit since 2004.

GM's net income totaled $4.7 billion last year, fueled by strong sales in China and the U.S. as the global auto market began to recover. It earned $2.89 per share on revenue of $135.6 billion.

It was the company's best performance since earning $6 billion in 1999 during the height of the pickup truck and sport utility vehicle sales boom.

The performance, while beating Wall Street expectations, didn't help GM's stock price, which fell more than 4 percent Thursday afternoon to $32.75, below November's initial public offering price of $33 per share.

David Whiston, an auto analyst with Morningstar, said fears about the impact of $4 per gallon gasoline on a company traditionally known for selling SUVs and trucks and talk of GM's aging model lineup are possible reasons.

Still, GM's full-year profit is remarkable considering that from 2004 through 2009, GM was in a state of perpetual restructuring, trying to downsize its work force and shrink factory capacity to match falling demand for its vehicles. The company lost more than $80 billion during the period and almost ran out of cash in 2008, when the government began a bailout that eventually reached $49.5 billion.

With government financing, GM went into bankruptcy protection in June 2009, leaving a quick 40 days later cleansed of burdensome debt and labor costs.

It lost $4.4 billion in the second half of 2009, but began making money as auto sales started to recover last year. It posted $4.2 billion in profits during the first nine months, helped by its lower costs and new models such as the Chevrolet Equinox — a small SUV that seats five.

It touted the profits to convince investors to buy stock in the revamped company. It then returned to the stock market in its IPO in November.

"Last year was one of foundation building," Chairman and CEO Dan Akerson said Thursday. In fact, GM showed it could turn profits consistently — for four straight quarters in 2010 — even though demand for cars still remained relatively low.

For the fourth quarter, GM reported net income of $510 million, or 31 cents per share, its lowest quarterly profit of the year, but still far better than the $3.5 billion it lost in the same period in 2009.

The net income included $400 million in charges for paying preferred stock dividends and buying preferred shares from the U.S. government. Without the charges, the company earned 52 cents, beating Wall Street's estimates. Analysts polled by FactSet expected 49 cents per share.

Revenue for the quarter totaled $36.9 billion, also beating analysts' estimates of $34.3 billion.

GM still faces a challenging 2011 with an aging U.S. model lineup, rising gas prices that could cut into truck sales and a European unit that must be restructured to turn a profit.

This year will be one of transition for GM, which has only a few new vehicles slated, said Citigroup Global Markets analyst Itay Michaeli. In the U.S., sales generally wane as models grow older.

The company, he said, had a market share of just over 20 percent in the last quarter of the year, and that rose to 21.8 percent in January as GM increased incentives such as rebates and low-interest loans.

Michaeli said his surveys show that February should run above analysts' expectations of 18.5 percent, a sign that GM has enough momentum to carry it through the year with its current model lineup.

"Hopefully they'll continue to run at a higher market share without having to use more incentives," he said.

GM Chief Financial Officer Chris Liddell said the company's U.S. incentives dropped $800 per vehicle in the fourth quarter from the same period of 2009. But GM increased them by $400 from December to January as the company saw a chance to gain sales, he said.