GM's profit fell 58% in 4Q

No. 1 auto firm earns 60 cents a share, cancels profit-share checks

January 17, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

General Motors reported a 58 percent drop in fourth-quarter earnings yesterday and, for the first time since 1993, said its hourly workers would not receive profit-sharing checks.

The world's largest automaker, faring slightly better than Wall Street analysts had expected, said it earned $255 million, or 60 cents a share, in the three months that ended Dec. 31.

For the fourth quarter of 2000, the company reported a profit of $609 million, or $1.15 a share, excluding a one-time charge of $520 million related primarily to its decision to drop its Oldsmobile line and reduce employment at five plants.

Sales in the fourth quarter of 2001 totaled $45.95 billion, up from $45 billion in the last three months of 2000.

For the full year, GM said it earned $1.5 billion, or $3.23 a share, on sales of $127.3 billion, excluding special items. That compares with earnings of $5 billion, or $8.58 a share, and revenue of $183.3 billion in 2000.

Including special items, GM said, its 2001 net income was $601 million, or $1.77 a share, compared with $4.5 billion, or $6.68 a share the previous year.

Despite the profit, GM said it would not be distributing profit-sharing checks or incentive bonuses to managers because the company did not meet predetermined targets.

A provision in the contract with the United Auto Workers union allows the company to withhold profit-sharing payments if the automaker fails to achieve certain financial "hurdles" based on a formula that includes earnings.

The news was disappointing for Barbara Ratliffe, a worker at the company's van assembly plant in Baltimore.

"I had not heard that," she said. "I don't like it. Last year we got a little less than $1,000."

The profit-sharing decision also applies to the company's Allison Transmission plant in White Marsh.

GM's fourth-quarter results were a penny a share more than the revised forecast of 59 cents a share by analysts surveyed by Thomson Financial/First Call.

"It was a pretty good performance," said David Healy, a Burnham Securities analyst. "They are down from last year, but still in the black."

He said GM is performing a lot better than its domestic rivals, Ford Motor Co. and DaimlerChrysler, which have yet to report 2001 results.

"Our performance in 2001 was quite strong considering all the challenges we faced, and we intend to continue building momentum throughout the coming year," said John F. Smith Jr., GM's chairman.

Largely due to its booming light-truck business, GM was able to boost its share of the U.S. car and light-truck market for the first time since 1990.

GM grabbed 29.2 percent of the light-truck market last year, up from 27 percent in 2000. Its share of the car market slipped to 26.9 percent from 28.6 percent in 2000. GM had 28.1 percent of the total market last year, up from 27.8 percent the previous year.

Analysts say that sales of light trucks, including pickups, vans and sport utility vehicles, helped GM post a profit last year. Trucks, which outsold cars in the United States for the first time last year, are twice as profitable as cars.

Higher incentive costs, including its zero percent financing program, helped reduce the profit of GM's North American operations to $392 million in last year's final quarter, down from $979 million in the 2000 fourth quarter.

GM shares lost 21 cents yesterday to close at $49.75.

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