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.
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%)|
|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|
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.