GM profit shrinks to $6.58B in ’19
Automaker logs $232M loss in fourth quarter after strike
DETROIT — Despite a 40-day strike by factory workers and slumping sales in the U.S. and China, General Motors still made money last year.
The company on Wednesday posted a $6.58 billion profit for the year, but that was down almost 17% from 2018.
GM couldn’t avoid red ink the fourth quarter, though. The automaker lost $232 million, or 16 cents per share, largely because most of the strike by the United Auto Workers union happened during the quarter.
Excluding one-time items for employee separations and the sale of a Chinese joint venture, GM made 5 cents per share, soundly beating Wall Street estimates. Analysts polled by FactSet expected a profit of 1 cent per share.
Revenue for the quarter was $30.8 billion, down almost 20% from a year ago.
The company still made $8.2 billion in North America for the full year, so about 44,000 U.S. factory workers will get $8,000 profit-sharing checks this month. That’s down from $10,750 in 2018.
GM said the strike, which ran from Sept. 16 through Oct. 25, cost the company sales of 191,000 vehicles and cut quarterly pretax earnings by $1.39 per share. For the full year, the strike cost GM $1.89 per share, the company said.
The strike paralyzed GM’s U.S. factories and cut production in Mexico and Canada before it was settled.
At its Capital Markets Day presentation Wednesday to investors in New York, GM executives gave a glimpse into the company’s electricvehicle strategy.
In addition to an all-electric Hummer pickup being introduced in May, GM has plans for at least nine more vehicles, although the time frame wasn’t clear. A slide in the presentation showed compact SUVs, larger SUVs, two autonomous shuttles and “low roof” cars. Previously the company has pledged to roll out 20 electric models that it plans to sell worldwide by 2023.
Chief Executive Officer Mary Barra said GM is working on at least 300 miles of range for its third-generation of electric vehicles. At present, the Chevrolet Bolt can go about 260 miles on a single charge.
GM also plans to make its Super Cruise partially automated system available on seven more models next year, and 12 more in the following two years including models outside of the Cadillac brand such as full-size pickups and SUVs, President Mark Reuss said.
Super Cruise can keep a car in its lane, keep a safe distance from vehicles ahead of it and automatically brake to avoid a collision. An update will allow automated lane changes. Currently the optional feature is offered only on Cadillac models and can be use only on selected highways.
GM continues to spend a lot on Cruise LLC, the selfdriving vehicle unit in which it owns a majority stake.
Cruise cost GM $1 billion in 2019 and has been noncommittal about how soon it will launch a driverless ridesharing service that would start bringing in revenue. The company initially planned to start deploying robo-taxis last year, but postponed the debut of the service indefinitely.
GM also offered earnings guidance for this year, saying it expects pretax earnings of $5.75 to $6.25 per share this year, about flat with 2019 when strike costs and profits from its investment in the Lyft ride-hailing company and stock warrants in France’s PSA Peugeot are deducted.
Globally, GM’s vehicle sales fell nearly 8% to just over 7.7 million last year. In the U.S., sales dropped 2.5%.
Strong U.S. pickup sales helped GM weather the strike and other financial headwinds, Chief Financial Officer Dhivya Suryadevara said Wednesday. The company rolled out new light- and heavy-duty pickups during the year, gaining a full point in market share of sales to individual buyers, she said.
Chinese government steps to stop the coronavirus outbreak from spreading have forced GM to close 15 assembly plants there, and Suryadevara said it’s too soon to talk about how long it will take to reopen the factories. “We’ve activated contingency plans across the enterprise,” she said. “People are working around the clock here trying to mitigate the impact of this going forward. But it’s really early days and it’s very fluid.”
Suryadevara said parts flow from Chinese factories to GM’s U.S. factories and other plants around the world. The company is looking at what vehicles could be affected by a prolonged shortage if Chinese factories stay closed.
“It’s an integrated supply chain,” she said. “We are looking at all of that and figuring out what are the key components, which are the vehicles that are impacted and which are the trims and models that are impacted and what we can do for each of those parts to mitigate the impact,” she said. “We’ll have more to say as the situation unfolds.”
While rival Ford Motor Co. has struggled to keep profit stable, GM has managed to offset weaker sales by selling more expensive models. That’s true in China, where Cadillac is growing and mainstream brands are in decline, and in the U.S., where GM is relying on a full year of its new pickups and the thirdquarter debut of updated Chevrolet Tahoe and Cadillac Escalade SUVs.
GM is expecting to weather 2020 conditions better than Ford, whose shares fell as much as 9% Wednesday in their biggest intraday decline since July 2016. The No. 2 U.S. automaker by global vehicle sales on Tuesday forecast 2020 earnings that fell short of expectations. It’s been hurt by heavy spending to get new models to market and investment in electric vehicles, and sales have slumped in key markets.