|Results for GM Automotive Operations. Click to enlarge.|
General Motors reported a 2005 calendar-year loss, excluding special items, of $3.4 billion compared with net income of $3.6 billion in 2004. The size of the operational loss was bigger than analysts’ estimates.
GM’s automotive operations reported an adjusted loss of $5.3 billion in 2005, compared to adjusted earnings of $1.2 billion in 2004. The decline was principally driven by large losses in North America (-$5.6B), and partially offset by improved results in Europe and in the Latin America, Africa and Middle East region.
In the fourth quarter of 2005 GM’s automotive operations reported an adjusted loss of $1.5 billion compared to adjusted earnings of $268 million in the year-ago period.
Including special items, GM reported a total loss of $8.6 billion, or $15.13 per share for 2005, compared to net income of $2.8 billion, or $4.92 per share in the year-ago period. Revenue was $192.6 billion in 2005, compared to $193.5 billion in 2004.
The special items include an after-tax restructuring charge of $1.3 billion at GM North America and a preliminary after-tax charge of $2.3 billion associated with the UAW/Delphi benefit guarantee.
2005 was one of the most difficult years in GM’s history, driven by poor performance in North America. It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed—our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue.—GM Chairman and CEO Rick Wagoner
GM sold 9.2 million vehicles worldwide in 2005, the second-largest volume in GM’s history, on the strength of increased sales in three of GM’s four business regions and all-time sales records in the Asia Pacific and Latin America, Africa and Middle East regions.
Vehicle sales in the Asia Pacific region were up 20%, the Latin America, Africa and Middle East region increased 19%, and Europe posted a 1.3% gain. Unit sales were down 3.1 percent in North America in 2005. As a result, GM’s share of the global automotive market was 14.2 percent in 2005, down from 14.4 percent in 2004.
GM North America (GMNA) reported an adjusted loss of $5.6 billion in 2005, compared to adjusted earnings of $1.1 billion in 2004, reflecting a weaker sales mix, lower production volumes stemming from a significant reduction in dealer inventories and lower market share, increased material costs including those for product improvements, continuing high health-care costs and increased spending on marketing and advertising.
In the fourth quarter of 2005, GMNA reported an adjusted loss of $1.5 billion, compared to adjusted earnings of $449 million in the year-ago period. The loss in the fourth-quarter of 2005 was primarily attributable to lower production of full-sized sport utility vehicles due to the start-up of the all-new next generation vehicles in this category, increased health-care costs, and higher marketing and advertising spending. In addition, there were favorable non-recurring items in the year-ago period.
GM expects to reduce its North American structural costs by $6 billion on a running-rate basis by the end of 2006, with more than $4 billion of the reduction coming in calendar year 2006, and to reduce its net material costs by $1 billion.