Currency losses hit GM’s fourth-quarter profits

General Motors (GM) said on Tuesday its fourth-quarter net income fell partly because of $500 million in foreign exchange losses, while the automaker forecast 2017 profit per share would be flat to slightly up from 2016.
GM said fourth-quarter net income fell to $1.8 billion, or $1.19 per share, from $6.3 billion, or $3.92 a share, a year earlier.
Excluding one-time items, GM earned $2.4 billion, or $1.28 a share, in the latest quarter, down 14 percent from a year earlier. The adjusted result beat analysts’ expectations of $1.17 per share.
GM forecast adjusted earnings per share for all of 2017 at $6 to $6.50 a share, compared with $6.12 for all of 2016.
Shares were up 1.5 percent at $37.40 in premarket trading.
Most of the currency impact was caused by the decline in the value of the British pound after the UK’s vote to leave the EU, GM said.
GM’s CFO Chuck Stevens said the company does not expect to break even in Europe this year, but will push to “get to that point in 2018.”
GM said profits were pressured in 2016 because it launched several car models at a time when consumers were turning away from cars to buy SUVs.
GM’s adjusted fourth-quarter profit margin in North America fell to 8.4 percent from 10 percent a year earlier. Adjusted profit margin in North America for full-year 2016 was 10.1 percent, down from 10.3 percent in 2015.
Inventories of unsold vehicles at its US dealers rose by one-third to 845,000 vehicles at the end of 2016. Stevens said the company built up stocks ahead of product launches, and intends to bring inventories down through the year.
He said GM is assessing the ways in which proposals by US President Donald Trump for a border tax on goods imported into the US could affect the company.
“We support tax reform that would make the US manufacturing base stronger. A border tax is one part,” he said. “There are a lot of moving pieces.”
GM’s 52,000 hourly US workers represented by the United Auto Workers union will get an annual bonus of $12,000, up from $11,000 a year ago. This is based on GM’s North American adjusted profit.

Source: Arab News