Trucks like the Chevrolet Colorado fueled GM’s results
General Motors'GM -3.57% net profit hit a record $9.7 billion in 2015, driven by strong sales in the U.S. and China, and the company said it doesn’t share investors’ fears that the cyclical auto industry has peaked.
“We’re well prepared for the downturn. We just don’t think it’s going to come any time soon,” Chief Financial Officer Chuck Stevens told reporters in an early morning conference call. “We believe the industry fundamentals and economic fundamentals are such that we would see a strong U.S. industry for the next number of years.”
Stevens said GM’s $10.8 billion in earnings before interest and tax (EBIT), excluding one-time items, demonstrates a new discipline inside the company to manage its capital efficiently while investing for the future. GM is on track, he said, to pare $5.5 billion in annual costs by 2018, which will more than offset investments in new technologies like connected and autonomous cars.
“It was a strong year on many fronts, capped with record sales and earnings, and a substantial return of capital to our shareholders,” Chief Executive Mary Barra said in a statement. “We continue to strengthen our core business, which is laying the foundation for the company to lead in the transformation of personal mobility. We believe the opportunities this will create in connectivity, autonomous, car-sharing and electrification will set the stage for driving value for our owners for years to come.”
GM’s revenue dipped to $152.4 billion, from $155.9 billion in 2014, which was attributed to foreign exchange rates.
In North America, GM’s operating profit soared to a record $11 billion, up from $6.6 billion a year ago, as EBIT-adjusted margins climbed to a record 10.3 percent. Based on that performance, 49,600 hourly UAW workers will receive profit-sharing checks up to $11,000.
In Europe, GM narrowed its operating loss for the year to $800 million, from $1.4 billion in 2014, and Stevens said the company is on track to break even in 2016, as promised. GM broke even in South America in the fourth quarter, but lost $600 million for the year amid continued economic upheavals.
In China, GM earned $2.1 billion in equity income from its joint ventures, about equal to last year. The carmaker also earned $800 million on financial services, equal to 2014.
Last year, GM returned approximately $5.7 billion to shareholders, including $2.2 billion in common stock dividends and $3.5 billion through a special stock repurchase program. Nonetheless, GM shares are down 17 percent in the past year.
“The best way to drive shareholder value is to execute,” Stevens said, adding that he believes GM’s shares will eventually reflect its strong results.