General Motors reports record annual loss
written by Goldmoney
at 12 February 2008
General Motors (GM), which celebrates its 100th anniversary this year, reported a 2007 net loss of $38.7 billion, or $68.45 a share, on Tuesday — making 2007 the worst year on record for the world's largest automaker.
The news came on the same day GM announced a sweeping buyout program to all of its 74,000 hourly workers who are represented by the UAW, part of an ongoing effort to reduce the number of highly paid autoworkers at the company.
In 2006, GM reported a net loss of $2 billion, or $3.50 per diluted share.
Despite the historic decline, the loss is almost entirely attributable to a non-cash special accounting charge of $38.3 billion that GM announced in the third quarter. The charge is related to unused tax credits.
The 2007 loss topped GM's previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor's Compustat.
Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006, beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents a share.
What's more, there were positive signs beneath the overall result for GM, which is regarded by many as the Detroit automaker farthest ahead in its financial turnaround.
Last year, for example, GM posted its second best year of worldwide auto sales. The automakers sales increased 3%, or 277,000 units, to 9.4 million vehicles. Almost 60% of the company's sales were outside of the United States, in key growth markets such as Eastern Europe, Latin America and the Asia Pacific.
Those improved sales, along with favorable currency exchanges, helped GM's core automotive business generate record revenue of $178 billion, a $7 billion improvement from the prior year.
