General Motors Company (GM) posted a profit of 52 cents per share in the fourth quarter of 2010, exceeding the Zacks Consensus Estimate by 5 cents per share. The results excluded net charges of $0.4 billion due to the previously disclosed $0.7 billion loss on the purchase of U.S. Treasury preferred shares.

In absolute terms, the company turned a profit of $510 million during the quarter in sharp contrast to a loss of $3.52 billion in the comparable quarter of 2009 driven by the recovery in the North American and European automotive markets.

The automaker generated revenues of $36.9 billion during the quarter, which was higher than the Zacks Consensus Estimate of $34.9 billion. Unit sales escalated 11% to 2,173 vehicles from 1,952 vehicles in the fourth quarter of 2009. The automaker occupied a market share of 11.5% during the quarter, up from 11.4% in the year-ago quarter.

GM North America (GMNA) reported earnings before interest and taxes (EBIT) of $813 million compared with a huge loss of $3.44 billion in the fourth quarter of 2009. GM Europe (GME) posted a narrower loss before interest and taxes of $568 million compared with $799 million a year ago.

GM International Operations (GMIO) reported a fall in EBIT to $334 million from $428 million in the fourth quarter of 2009. GM South America (GMSA) had EBIT of $195 million, down from $291 million in the comparable quarter a year ago. GM began considering GMSA as an operating segment from the fourth quarter.

Annual Results

For full year 2010, depicted a profit of $4.9 billion (excluding the net charges related to the purchase of U.S. Treasury preferred shares) compared with $104.69 billion (combining the Old GM results for the period January 1 to July 9) in the previous year. On per share basis, the profit of $2.89 inched past the Zacks Consensus Estimate by 2 cents per share.

Revenues in the year soared 30% to $135.59 billion on the back of increased worldwide automotive sales. It was higher than the Zacks Consensus Estimate of $132.97 billion. Unit sales increased 12% to 8,390 vehicles from 7,477 vehicles (combining Old GM and New GM) in 2009. The improvement in unit sales was primarily seen on the back of higher sales at GMIO and GMSA. The company occupied a market share of 11.4% during the year.

Financial Position

GM had cash and cash equivalents of $21.06 billion as of December 31, 2010 compared with $22.68 billion at the end of 2009. Total debt reduced significantly to $4.63 billion as of the above date from $15.78 billion. This translated into a debt-to-capitalization ratio of 11%, down from 43% in the year-ago period.

At the end of the year, net cash flow was $6.59 billion. After deducting $4.20 billion of capital expenditures, the company generated a free cash flow of $2.39 billion from its automotive operations.

The strong results led the company to make a profit sharing payment to its nearly 45,000 eligible hourly employees in the U.S. and approximately 3,000 eligible GM Components Holdings (GMCH) employees. The average payout per employee is estimated at $4,300 for GM employees and $3,200 for GMCH employees.

GM, a Zacks #3 Rank (Hold) stock, had to seek bankruptcy protection in 2009 due to unfavorable economic conditions and a rapid decline in sales. However, the automaker recouped its sales by banking on the emerging markets and the economic recovery. Through its recently completed IPO, it has repaid up to $23.1 billion to the U.S. government.

The company’s hometown rival, Ford Motor Co. (F), posted a 24% fall in profit to $1.2 billion or 30 cents per share (before special items) in the fourth quarter of 2010 from $1.58 billion or 43 cents per share (before special items) in the same quarter of 2009. With this, the automaker has missed the Zacks Consensus Estimate by 19 cents per share.

The decline in Ford’s profit was attributable to lower year-over-year revenues generated by the company’s automotive operations as well as the financial arm. Total revenue during the quarter ebbed 7% to $32.5 billion. However, excluding revenues from Volvo, sales improved by $1.6 billion or 5% from the fourth quarter of 2009.

 
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