GM Swings to $5.2 Billion Loss on Charge Tied to Tax Changes
By Mike Colias
General Motors Co. said its fourth-quarter bottom line swung to a $5.2 billion loss because of a hefty charge related to U.S. tax reforms, but stout demand for pickup trucks and SUVs pushed operating profit to a record for the quarter, surpassing Wall Street forecasts.
GM's net loss for the final three months of 2017 included a $7.3 billion noncash write-down to reflect the loss in value of deferred tax assets held on its balance sheet. Several large companies have reported sizable write-downs in the value of those credits against future taxes, which fell because of the lower corporate tax rate under federal tax overhaul.
The largest U.S. auto maker in terms of sales said fourth-quarter operating profit excluding one-time factors rose 19% to $3.1 billion, or $1.65 per share, easily hurdling the $1.38 average analysts' estimate.
Revenue slipped 5.5% to $37.7 billion, higher than the average analyst forecast of $36.5 billion, bolstered by strong sales of sport utilities in North America.
For the year, GM earned $12.8 billion in operating profit, matching last year's record. That amounted to $6.62 per share, above the $6-$6.50 range GM had forecast.
The company swung to a net loss for the year of $3.9 billion on the tax-related charge and other one-time expenses related to the August sale of its European business to French car maker Peugeot.
GM is benefiting from heightened demand for sport utilities and pickup trucks, which generally reap bigger profits than passenger cars. The trend is especially helping GM, Ford Motor Co. and Fiat-Chrysler Automobiles NV, which sell broader portfolios of trucks and SUVs than Asian rivals.
The richer product mix is a big factor allowing GM to sustain high profit margins even as sales in the key U.S. market edge down after a seven-year growth spurt. Fourth-quarter North American operating profit rose 7%, to $2.9 billion, even as production slid about 15%, according to an estimate from WardsAuto.com.
Under terms of its United Auto Workers contract, GM said it will cut profit-sharing checks later this month of up to $11,750 to about 50,000 U.S. factory workers, based on the operating profit in North America.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
February 06, 2018 08:00 ET (13:00 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.