GM Keeps Expectations Low for 2014 As Global Restructuring Effort Continues

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GM CEO Mary Barra

General Motors reported a lower net profit for 2013 as restructuring costs in Europe and other special items offset an improved operating performance, including record results in North America.

GM's 2013 net profit was $3.8 billion, down from $4.9 billion in 2012, as one-time charges of $1.3 billion, along with $1.7 billion in higher taxes, hurt the company's year-end results.

Revenue increased 2 percent to $155.4 billion, compared with $152.3 billion in 2012. Full-year earnings before interest and tax (EBIT) adjusted was $8.6 billion, compared with $7.9 billion in 2012.

GM's new CEO Mary Barra called it 'a solid year' but said 'we are not where we want to be on profitability' and vowed that her team was focused on improvement. 'The tough decisions made during the year will further strengthen our operations. We're now in execution mode and our sole focus will be on delivering results on a global basis.'

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GM also said it would take an additional $1.1 billion in restructuring charges in 2014, on top of $1.3 billion last year, including costs to close a factory in Germany and pay severance to workers as it pulls out of Australia.

GM's North American earnings before interest and taxes (EBIT), adjusted for special items, were $1.9 billion in the fourth quarter and $7.5 billion for the year. With a fourth quarter operating margin in North America of 7.5 percent, on the heels of a 9.3 percent margin in the third quarter, GM's new chief financial officer Chuck Stevens said 'this is clearly an inflection point' as GM works toward its goal of 10 percent pre-tax operating margin. 'We are on a continued upward trend on margins from 2013 through mid-decade,' said Stevens.

In GM's international operations, however, the company continued to struggle. GM losses in Europe narrowed to $800 million, from a loss of $1.9 billion in 2012, while in South America and other international operations (except China), GM profits declined. GM's joint ventures in China generated a 7.6 percent net profit margin in the fourth quarter.