GM Shares Gain on Pledge to Stem Europe Losses
DETROIT (TheStreet) -- GM(GM) shares were rising Thursday as the automaker hinted at strong action in Europe, where it lost $582 million in the fourth quarter.
"We will do what's required to fix this business," says CFO Dan Ammann on the company's earnings call. The full-year loss in Europe totaled $747 million in adjusted earnings before interest and taxes, despite improving by $1.3 billion over 2010. The improvement "did not go far enough," Amman says.
|GM shares were rising Thursday as the automaker hinted at strong action in Europe, where it lost $582 million in the fourth quarter.|
"This is simply unacceptable on a go-forward basis," he says. General Motors Europe "has to become profitable even in a challenged economic environment. We are not relying on this to get better
In January, industry auto sales in the top 19 European markets fell by 7.2%. "The market will be down in 2012," Ammann says. "We will need to show improvements in both revenues and costs to be successful."
Shortly after noon, GM shares were $1.57, about 6%, to $26.50. Ford(F) shares were up 32 cents, to $12.70.
GM has already shaken up its management in Europe, and "a lot of us here are spending a lot of time there and we are very focused on getting to the right answers," says Amman, who notes that the company is talking with "the unions and governments in every country" regarding further action.
CEO Dan Akerson says, "There's a general recognition by all constituencies that the situation in Europe today is not a whole lot different than in North America or the U.S. three plus years ago," when cost reductions and capacity cutbacks were required.
GM also is working to reverse its losses in South America, where its EBIT-adjusted fourth-quarter loss was about $200 million. There, "we should start to see some stability and growth," Akerson says. "We intend to aggressively address our somewhat aging portfolio." He says GM will introduce seven new vehicles in South America this year.
During the quarter, including items, GM earned $500 million or 28 cents a share, including a net loss from special items of 11 cents. Excluding items, the company earned 40 cents a share. Analysts surveyed by Thomson Reuters had estimated 41 cents.
-- Written by Ted Reed in Charlotte, N.C.
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