GENERAL MOTORS REPORTS
IMPROVED EARNINGS
Investors in General Motors and GMAC bonds received welcome news this week.
Following a strong sales performance in February, General Motors’ turnaround continued with the release of its 2006 annual financials and fourth quarter results. The efforts of GM management to restructure its business and reduce costs were much in evidence. In a tough environment, GM’s total net income for 2006, prior to special items, was $2.2 billion, an increase of $5.4 billion from just one year ago.
Strong fourth quarter results were impressive as well. GM earned $950 million, its largest quarterly profit since the second quarter of 2004. GM continued to improve its North American auto operations by breaking even after a $1.4 billion loss in the fourth quarter of 2005.
GM management, under CEO Rick Wagoner, was able to cut $9 billion in costs in 2006, $3 billion more than planned. Restructured health benefits, attrition and factory closings helped to bring GM’s capacity in line with sales.
GM showed improvements in other areas as well. The company has $26.4 billion in liquidity and its pension fund is over-funded by $17.1 billion.
While GM continues to strengthen its U.S. operations, growth remained strong in Latin America, Europe and Asia. Additionally, GMAC, of which GM remains a 49% owner, continued its history of strong results, booking $2.1 billion in net income for full year 2006.
03/14/07
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