Source: MSN Money
General Motors made $12.8 billion in pretax profits in 2017, and the company’s union-represented workers will get profit-sharing checks of $11,750.
The figure equaled what the Detroit automaker earned in 2016 and came as the automaker changed its global footprint by completing the sale of its European division and announced plans to leave south and east Africa and India.
Pretax profits dropped in North America from $12.4 billion to just less than $12 billion, and the profit-sharing checks for United Auto Workers-represented hourly workers will represent a slight dip from the $12,000 a year earlier. But the company said it returned to profitability in South America.
The company’s earnings per share were up more than 8% to $6.62, which beat the consensus of as high as $6.50 per share. For the fourth quarter, the company made more than $3 billion before taxes and had earnings per share of $1.65.
The company reported a net loss for the year of $3.9 billion because of a number of special charges, including $7.3 billion related to tax reform and $6.2 billion charge related to the sale of Europe’s Opel unit.
“The actions we took to further strengthen our core business and advance our visions for personal mobility made 2017 a transformative year. We will continue executing our plan and reshaping our company to position it for long-term success,” Chairman and CEO Mary Barra said in a statement.
Chuck Stevens, executive vice president and chief financial officer, said the company plans to build on its momentum in 2018.
“Improvements in all operating segments and an intense focus on cost reductions generated a record quarter and another record year,” Stevens said.
GM’s profit-sharing checks are higher than its cross-town Detroit rivals. Ford planned to provide profit-sharing checks of $7,500, and Fiat Chrysler said it would pay its UAW-represented workers an average of $5,500. Fiat Chrysler also said it would give U.S. workers, aside from senior leadership, $2,000 bonuses.
GM, like its Detroit-area rivals, has been profiting from an auto market that remains historically strong and a consumer thirst in the U.S. for more profitable SUVs and trucks.
David Kudla, CEO and chief investment strategist for Mainstay Capital Management, noted in a report released last week that GM was using its sales of those SUVs and trucks to fund its development of autonomous vehicles and other technology and that the company’s strategy is being rewarded by Wall Street.
“With a fortress balance sheet, successful product pipeline and well-articulated strategic vision for the future of the automotive industry and mobility in general, investors can see real value in GM, beyond a nice dividend,” Kudla wrote. “We are now on the backside of peak auto. However, GM expects to generate continuing strong earnings in declining industry sales. We believe they have the products and strategic plans to do so.”