General Motors posts biggest annual US auto loss

ou
13 February 2008

Detroit: General Motors Corp. has reported an annual loss of $38.7 billion for 2007. The loss was the largest one ever for any automotive company. According to Standard & Poor's Compustat, the 2007 loss was also higher than GM's previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting. 

Excluding tax charges and other special items, GM lost $23 million, or 40 cents per share, for the year, compared with a net income of $2.2 billion in 2006 beating Wall Street's expectations, which had expected GM to post a full-year loss of 95 cents per share.

For the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, against a net income of $950 million in the same quarter the previous year.

Fourth-quarter charges also included payment of $622 million to Delphi Corp., GM's former parts division, for its restructuring efforts, and a gain of $1.6 billion due to tax credits related to GM's pension liabilities and the sale of GM's Allison Transmission unit.

GM's Chairman and Chief Executive Officer Rick Wagoner said that his company had succeeded in reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia in 2007. Wagoner also said the company's decision to reduce low-profit sales to daily rental companies by 110,000 in 2007 had also affected U.S. sales.

Wagoner said he was pleased with the positive improvement trend in its automotive results, especially given the challenging conditions in important markets like the U.S. and Germany.