General Motors (NYSE:GM) said that it lost $194 million in the fourth quarter, down from a $2 billion profit a year earlier, after a nationwide strike that ended late in October left it scrambling to make up production volumes. 

Excluding one-time charges, GM earned $0.05 per share in the quarter, beating Wall Street's estimate of $0.01 as reported by Thomson Reuters. But GM's fourth-quarter revenue of $30.8 billion fell slightly short of the analysts' $31.04 billion estimate. 

For the full year, GM earned $6.7 billion in net income, down 17.4% from 2018. 

A 2020 GMC Sierra AT4 pickup truck.

A 2020 GMC Sierra AT4 pickup. GM took a big hit from the UAW strike, but strong demand for its new pickups helped soften the blow. Image source: General Motors.

The raw numbers

Metric Q4 2019 Change (Decline) vs. Q4 2018 2019 Change (Decline) vs. 2018
Revenue $30.8 billion (19.7%) $137.2 billion (6.7%)
Global deliveries 2,034,342 (9.4%) 7,717,930 (8%)
EBIT-adjusted $105 million (96.2%) $8.4 billion (28.8%)
EBIT-adjusted margin 0.3% (7.0 pp) 6.1% (1.9 pp)
Net income (loss) ($194 million) $2.2 billion lower $6.7 billion (17.4%)
Adjusted earnings per share $0.05 (96.5%) $4.82 (26.3%)
Automotive operating cash flow $769 million (87.8%) $7.4 billion (37%)
Adjusted automotive free cash flow ($1.312 billion) $5.467 billion lower $1.1 billion $2.7 billion lower

Data source: GM. EBIT = earnings before interest and tax. Adjusted figures exclude the effects of one-time items; GM took one-time charges of $358 million in Q4 2019 and $1.33 billion in Q4 2018. Automotive results exclude results related to GM's captive-financing subsidiary. Pp = percentage points.

What happened at GM in the fourth quarter

All profit and loss figures in this section are on an EBIT-adjusted basis, except as noted. 

  • GM North America earned $263 million in the fourth quarter, down from $3.04 billion in the fourth quarter of 2018. The decline was more than explained by a 24% year-over-year drop in wholesale shipments, a result of the strike that closed U.S. factories for most of October. GM's pricing, and demand for its new pickups, remained strong in the quarter. 
  • GM North America's EBIT-adjusted margin was 1.2% in the fourth quarter, down from 10.2% a year ago. For the full year, it was 7.7%, down from 9.5% in 2018. 
  • GM announced a joint venture with LG Chem to produce electric-vehicle battery cells in a new factory in Lordstown, Ohio. The factory is expected to open next year. 
  • GM International, which includes all of the company's automotive businesses outside of North America, lost $120 million in the fourth quarter versus a loss of $48 million a year ago. The decline was due largely to the slumping new-car market in China and currency-related headwinds in South America, partly offset by cost reductions and pricing gains. Equity income from GM's joint ventures with Chinese automakers fell to $239 million from $307 million in the fourth quarter of 2018. 
  • GM Cruise, the self-driving subsidiary, lost $305 million in the fourth quarter versus a loss of $194 million a year ago.
  • GM Financial, the captive-financing subsidiary, earned $498 million in adjusted earnings before tax (EBT adjusted), versus an EBT-adjusted figure of $416 million in the fourth quarter of 2018. Credit metrics remained steady (and good). 

Special items, cash, and debt

GM took $194 million in restructuring-related charges in the fourth quarter, as well as a $164 million writedown related to the sale of its share of a truck-making joint venture in China. 

As of Dec. 31, GM had $17.3 billion in cash available to its automaking business, along with another $17.3 billion in available credit lines, for total liquidity of $34.6 billion. Against that, GM had $14.4 billion in well-structured long-term debt, up from $14 billion at the end of 2018. 

GM said that its pension portfolios were underfunded by $11.8 billion as of Dec. 31, versus $11.5 billion at the end of 2018.

Looking ahead: Guidance for 2020

For 2020, GM currently expects:

  • Adjusted earnings per share between $5.75 and $6.25.
  • Adjusted automotive free cash flow between $6.0 billion and $7.5 billion.

In a nutshell, the company expects the slump in China to continue, with those effects largely offset by new products that should drive pricing and margin improvements in North America.

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