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GM profits soar to 10.8 billion on strong truck sales, resilience in China


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GM profits soar on strong truck sales, resilience in China
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Automotive News | February 3, 2016 - 7:30 am EST
-- UPDATED: 2/3/16 8:41 am ET - adds details
DETROIT -- General Motors today posted pretax operating profit of $10.8 billion for 2015 -- including $2.8 billion in the fourth quarter -- driven by booming sales of pricey SUVs and pickups and strong earnings in China despite the slowing market there.
The full-year operating profit excluding one-time items -- the figure that GM says best reflects its underlying performance -- marked a 67 percent jump from 2014 and was the highest amount since before the company’s 2009 bankruptcy. (A spokesman couldn’t confirm whether that number eclipsed the record annual profit of pre-bankruptcy GM).
GM’s fourth-quarter pretax operating profit excluding one-time items rose 15 percent to $2.8 billion. That was equal to $1.39 a share, vs. Wall Street forecasts of $1.21 a share.
Net income for the September-to-December period was $6.27 billion, inflated by a gain of about $3.9 billion from the favorable tax treatment on the reclassification of assets in certain European markets.

 

 

Edited by RichardJensen
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GM's EBIT adjusted margin of 7.1% in FY 2015 is a significant improvement from last year and comparable to Ford's FY 2015 figure of 7.2%.

 

As with the automotive industry in general, it remains to be seen if these results for GM can be sustained throughout FY 2016 amid forecasts of tepid economic growth in the USA and China.

Edited by aneekr
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Okay.

 

We need to unpack some things.

 

First of all, GM, like FCA is reporting EBIT, which is--as I mentioned in the FCA thread--a bit deceptive. It's not as deceptive with GM as it is with FCA, however I have issues with a company treating interest expense as though it were insignificant when they carry billions of dollars in debt in a profoundly cyclical industry.

 

GM's GAAP net operating income before taxes was $4.9B, by comparison Ford's (factoring in their much larger credit arm) was $8.05B.

 

GM had a lot of special items on both sides of the ledger last year; in addition to massive ongoing ignition switch costs (over $1.3B), they received a big pile of favorable tax items.

 

GM still has over $20B in unfunded pension obligations.

 

So I'm not ready to buy into GM's heavily massaged numbers.

 

They had a good year, but any time a company starts prominently featuring results that are "adjusted" and "EBIT", beware.

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Okay.

 

We need to unpack some things.

 

First of all, GM, like FCA is reporting EBIT, which is--as I mentioned in the FCA thread--a bit deceptive. It's not as deceptive with GM as it is with FCA, however I have issues with a company treating interest expense as though it were insignificant when they carry billions of dollars in debt in a profoundly cyclical industry.

 

GM's GAAP net operating income before taxes was $4.9B, by comparison Ford's (factoring in their much larger credit arm) was $8.05B.

 

GM had a lot of special items on both sides of the ledger last year; in addition to massive ongoing ignition switch costs (over $1.3B), they received a big pile of favorable tax items.

 

GM still has over $20B in unfunded pension obligations.

 

So I'm not ready to buy into GM's heavily massaged numbers.

 

They had a good year, but any time a company starts prominently featuring results that are "adjusted" and "EBIT", beware.

 

Of everything, I'd lose the most sleep over the unfunded pension funds if I were running GM.

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OTOH, you can insert press releases in full.

good idea, we sould remember that with reporting company results

 

How many sales an resources did aaGM have to burn through to get an an EBIT slightly bigger than Ford

Edited by jpd80
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So, what is the main difference between "EBIT Adjusted" and the figures Ford announced as Pre-Tax?

 

Is GM hiding negative Special items or are they positive one time additions?

 

Does GM also include the interest it pays on its loans or is that reported differently?

 

 

Did I miss something Richard may have already explained in another thread?

Edited by jpd80
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So, what is the main difference between "EBIT Adjusted" and the figures Ford announced as Pre-Tax?

 

Is GM hiding negative Special items or are they positive one time additions?

 

Does GM also include the interest it pays on its loans or is that reported differently?

 

 

Did I miss something Richard may have already explained in another thread?

 

The big thing is interest.

 

Ford generally minimizes special items in their releases, and I've long since given up griping about that because everybody does it.

 

But what EBIT and its more pernicious cousin EBITDA (earnings before interest, taxes, depreciation and amortization) do is minimize or obfuscate normal--and perhaps significant--aspects of a going concern.

 

Granted, GM had net interest income last year (as did Ford), but that's not typically the case, and in GM's case they're carrying less debt than Ford, so their interest expense is going to be lower (it was $400M last year vs. nearly $800M for Ford), but it's a bad habit to get into.

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The big thing is interest.

 

Ford generally minimizes special items in their releases, and I've long since given up griping about that because everybody does it.

 

But what EBIT and its more pernicious cousin EBITDA (earnings before interest, taxes, depreciation and amortization) do is minimize or obfuscate normal--and perhaps significant--aspects of a going concern.

 

Granted, GM had net interest income last year (as did Ford), but that's not typically the case, and in GM's case they're carrying less they unloaded debt through bankruptcy than and Ford didn't, so their interest expense is going to be lower (it was $400M last year vs. nearly $800M for Ford), but it's a bad habit to get into.

.

There ya go....fixed.

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And as we know GM will always outperform Ford in the good times, they should do because of the greater footprint.

How long can we expect these favorable economic conditions to continue, is there an inevitable slow down coming?

 

Should we be concerned about the way GM and Ford are spending their present income?

Are they focusing on the right areas going forward or are there some low percentage plays?

Edited by jpd80
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