General Motors Co. (GM - Analyst Report) recorded adjusted earnings of $2 billion or $1.19 per share in the fourth quarter of 2014, beating the Zacks Consensus Estimate of 85 cents. In comparison, the company generated earnings of $1.1 billion or 67 cents per share in the fourth quarter of 2013.
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Adjusted results for the fourth quarter of 2014 excluded an unfavorable impact of $0.9 billion or 53 cents per share. A $0.8 billion reduction in net income was related to the redemption of all outstanding Series A preferred shares. Meanwhile, in the fourth quarter of 2013, the company recorded an unfavorable impact of $0.2 billion or 10 cents per share from special items.
Net income (on a reported basis) amounted to $1.1 billion or 66 cents per share, compared with $0.9 billion or 57 cents per share in the year-ago quarter.
Revenues in the quarter declined 2.2%% year over year to $39.6 billion. Revenues missed the Zacks Consensus Estimate of $40 billion.
Worldwide wholesale unit sales went down 4.4% to 1.58 million vehicles in the quarter. Worldwide retail unit sales rose 3.3% to 2.55 million vehicles. The automaker’s global market share of 11.4% during the quarter remained flat year over year.
Adjusted earnings before interest and tax (EBIT) increased 26.3% to $2.4 billion from $1.9 billion in the fourth quarter of 2013. Operating profit amounted to $1.5 billion, considerably down from a profit of $5.1 billion a year ago.
2014 Performance
Adjusted earnings for 2014 declined 4.1% to $3.05 per share from $3.18 per share in 2013. However, earnings surpassed the Zacks Consensus Estimate of $2.68. Revenues for 2014 increased to $155.9 billion from $155.4 billion in 2013, marginally missing the Zacks Consensus Estimate of $156 billion.
Segment Results
GM North America (GMNA) reported a 0.8% rise in revenues to $25.3 billion during the fourth quarter 2014. Adjusted EBIT improved to $2.2 billion from $1.9 billion in the fourth quarter of 2013.
GM Europe (GME) witnessed a 5.1% decrease in revenues to $5.4 billion. The region reported a wider year-over-year adjusted loss of $393 million compared with a loss of $365 million in the year-ago quarter.
GM International Operations (GMIO) results were disappointing. The operations reported a 13.2% decline in revenues to $3.8 billion. Adjusted EBIT was $396 million, compared with $228 million in the comparable quarter of 2013.
GM South America (GMSA) witnessed a 9.4% decrease in revenues to $3.7 billion. The segment reported adjusted EBIT of $89 million in the quarter compared with a profit of $27 million in the fourth quarter of 2013.
GM Financial reported an impressive 18.5% rise in revenues to $1.3 billion during the quarter. EBIT in the segment was $119 million, down from $225 million in the fourth quarter of 2013.
Financial Position
GM had cash and cash equivalents of $18.95 billion as of Dec 31, 2014 compared with $20 billion as of Dec 31, 2013. Total debt (Automotive and Financial) increased to $46.8 billion as of Dec 31, 2014 from $36.2 billion as of Dec 31, 2013. Consequently, the debt-to-capitalization ratio increased to 56.9% as of Dec 31, 2014 from 45.9% at end 2013.
During 2014, the company had net cash flow of $10.1 billion from operating activities, down from $12.6 billion in the comparable year-ago period. Capital expenditures amounted to $7.1 billion in 2014 compared with $7.6 billion in the prior year.
General Motors announced that it will increase its second quarter dividend by 20% to 36 cents per share based on strong and sustained results.
GM currently holds a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include PACCAR Inc. (PCAR - Analyst Report), Tesla Motors, Inc. (TSLA -Analyst Report) and Toyota Motor Corporation (TM - Analyst Report). All three stocks carry a Zacks Rank #2 (Buy).
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