GM posts record Q4 operating profit, $4.9B loss on tax charge

U.S. tax reform caused General Motors to report a loss of US$4.9 billion for the fourth quarter, while the company achieved record operating profit for the period.

Without the US$7.3 billion noncash charge related to the tax overhaul, GM’s net income would have increased by US$1.9 billion compared with the same period in 2016.

The results are based on continuing operations, which do not include those such as its former Opel/Vauxhall business, sold by GM to PSA Group in 2017. Overall, the net loss was US$5.15 billion, with a larger tax-related charge of US$7.9 billion.

“The important aspect is to look at the operating results,” GM CFO Chuck Stevens said on Tuesday with the release of the quarterly report.

In the fourth quarter, GM’s adjusted earnings, before interest and taxes, increased 19 percent to $3.09 billion, and its global margin increased 1.7 percentage points to 8.2 percent. Revenue declined 5.5 percent to US$37.7 billion due to lower volumes in North America.

For the year, the automaker’s adjusted earnings, before interest and taxes, equaled its US$12.8 billion record from 2016, while net income plummeted 96 percent to $300 million largely due to the tax changes and a largely noncash charge of US$6.2 billion from the sale of its European operations.

Regions: North American earnings increased 7.3 percent to US$2.9 billion in the fourth quarter. The company’s international operations earned US$416 million, up from US$223 million in 2016.

Finance: GM Financial reported earnings of US$301 million, up 85 percent from US$163 million a year earlier.

Operating profit margin: The North American margin for the year was 10.7 percent — the third straight year above 10 percent.

Risk factors: Stevens said GM is “not overly concerned” about the prospect of hyperinflation and the economy overheating, which has sent stocks tumbling in recent days.

Expectations: GM’s results beat Wall Street estimates, as it reported a record earnings per share of US$6.62 for the year, including $1.65 in the fourth quarter — a key metric for how Wall Street judges the company.

GM shares rose 4 percent to US$41.15 in early trading during a volatile day on Wall Street, as of 9:53 a.m.