General Motors Co. (GM) recorded adjusted earnings of $1.1 billion or 67 cents per share in the fourth quarter of 2013, lagging the Zacks Consensus Estimate of 88 cents per share. In comparison, the company generated earnings of $0.8 billion or 48 cents per share in the fourth quarter of 2012.
Including the unfavorable impact of $0.2 billion or 10 cents per share from special items in the reported quarter, net income (on a reported basis) amounted to $0.9 billion or 57 cents per share, compared with $0.9 billion or 54 cents per share in the year-ago quarter. The change in net income per share was due to decline in the number of outstanding shares.
Revenues in the quarter grew 3.1% year over year to $40.5 billion, lagging the Zacks Consensus Estimate of $40.8 billion.
Worldwide wholesale unit sales inched down 1.3% to 1.65 million vehicles in the quarter. Worldwide retail unit sales rose 5.2% to 2.46 million vehicles. The automaker occupied a global market share of 11.4% during the quarter, down from 11.6% in the prior-year quarter.
Adjusted earnings before interest and tax (EBIT) went up 58.3% to $1.9 billion from $1.2 billion in the fourth quarter of 2012. Operating profit surged to $0.2 billion from loss of $34.8 billion a year ago.
2013 Results
GM recorded adjusted earnings of $5.1 billion or $3.18 per share in 2013, lagging the Zacks Consensus Estimate of $3.38. In comparison, the company generated earnings of $5.4 billion or $3.24 per share in 2012.
Including the unfavorable impact of $1.3 billion or 80 cents per share from special items in the year, net income (on a reported basis) amounted to $3.8 billion or $2.38 per share, compared with $4.9 billion or $2.92 per share in 2012.
Revenues increased 2% to $155.4 billion from $152.3 billion in 2012, exceeding the Zacks Consensus Estimate of $154.9 billion.
Segment Results
GM North America (GMNA) reported a 10% rise in revenues to $25.1 billion during the quarter. Adjusted EBIT increased 72.7% to $1.9 billion from $1.1 billion in the fourth quarter of 2012.
GM Europe (GME) witnessed a 1.5% increase in revenues to $5.3 billion. The region showed improvement as it reported a narrower year-over-year adjusted loss of $0.3 billion compared with $0.8 billion in the year-ago quarter.
GM International Operations (GMIO) results were disappointing. It reported a 22.9% decline in revenues to $4.9 billion. Adjusted EBIT plunged 71.4% to $0.2 billion from $0.7 billion in the comparable quarter of 2012.
GM South America (GMSA) witnessed a 7.7% decrease in revenues to $4.1 billion. Adjusted EBIT was break-even in the quarter compared with $0.1 billion in the fourth quarter of 2012.
GM Financial reported an impressive 108.1% rise in revenues to $1.1 billion during the quarter. EBIT in the segment inched up to $0.2 billion from $0.1 billion.
Financial Position
GM had cash and cash equivalents of $20 billion as of Dec 31, 2013 compared with $18.4 billion as of Dec 31, 2012. Total debt (Automotive and Financial) increased significantly to $36.2 billion as of Dec 31, 2013 from $16.1 billion as of Dec 31, 2012. Consequently, debt-to-capitalization ratio increased to 45.9% as of Dec 31, 2013 from 30.7% at the end of 2012.
During 2013, the company had a net cash flow of $11 billion from automotive operations, up from $9.6 billion in 2012. Capital expenditures amounted to $7.5 billion in the reported year and $8.1 billion in the prior year. The company’s automotive adjusted free cash flow was at $3.7 billion during 2013 compared with $4.3 billion a year ago.
Outlook for 2014
GM expects adjusted EBIT to improve marginally in 2014. Capital expenditures are expected to be about $7.5 billion in 2014, while restructuring charges are expected to be about $1.1 billion.
Our Take
GM is a leading global automotive company. The company has presence in almost 120 countries and has facilities located in 30 countries. It currently holds a Zacks Rank #4 (Sell).
GM’s rival Ford Motor Co. (F) posted earnings per share of 31 cents in the fourth quarter of 2013, which is in line with the fourth quarter of 2012 (all excluding special items). With this, the company surpassed the Zacks Consensus Estimate of 28 cents.
Some better-ranked automobile stocks worth considering are Tesla Motors, Inc. (TSLA) and Dongfeng Motor Group Company Ld (DNFGY). Tesla carries a Zacks Rank #1 (Strong Buy), while Dongfeng carries a Zacks Rank #2 (Buy).
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