DETROIT -- General Motors has strung together a tidy three-year run of profits by making big dollars in its back yard.
Now the question is whether its U.S. operations can keep making enough to carry the company and cover widening losses in Europe.General Motors on Thursday posted a profit of $4.9 billion for 2012, down 36 percent from a year earlier, when it made $7.6 billion. Its net income fell because of European losses and a truckload of one-time accounting gains and losses in both years. Last year's pretax profit, which excludes the one-time items, still dropped, but only by 5 percent to $7.9 billion. Revenue for the year rose 1 percent to $152.3 billion.The company's money machine, North America, made $6.9 billion before taxes for the year. But GM lost almost $1.8 billion in Europe, where it has too many factories and workers as sales slow in a faltering economy.The earnings in North America mean big bucks for GM's 50,000 U.S. factory workers, including some 3,000 in Arlington, who agreed to take profit sharing over pay raises in 2011 contract talks. The workers represented by the United Auto Workers union will get $6,750 each, down a little from $7,000 last year.The European losses widened by more than $1 billion. They wiped out the combined $1 billion made by GM's auto loan and South American businesses, plus part of the $2.2 billion made by international operations including China. GM expects the European market to weaken further this year, which could further stress its bottom line.Just about every automaker is seeing sales fall and losses mount in Europe as the economy there continues to unravel. And GM's use of U.S. profits to cover the losses isn't unique. Its chief rival, Ford Motor Co., posted a record North American pretax profit of $8.3 billion last year but lost $1.75 billion in Europe.Still, GM executives are optimistic that cost-cutting and 23 new vehicles by 2016 will help Europe break even before taxes by the middle of this decade. They predicted some improvement in GM's Europe performance this year, and they said new pickups, two new Cadillacs and other new models will keep profits rolling in the U.S."The GM launching these products is undeniably a stronger company than it was even a year ago," CEO Dan Akerson said.The optimism is showing up on GM's income statement. In the fourth quarter, the company returned roughly $35 billion in U.S. and Canadian tax credits to its books. Under accounting rules, GM must book the credits because it's likely to use them to offset income taxes. The gain, though, was largely offset by removal of goodwill and the devaluation of assets in Europe because of the poor prospects there.Despite the big profits in North America, GM is also showing signs of weakness there.Its North American pretax profit fell 3.3 percent from 2011, but Chief Financial Officer Dan Ammann said it would have gone up if not for an $800 million drop in pension income.
GM Financial earns $91 million
Fort Worth-based GM Financial, formerly AmeriCredit, earned $91 million in the fourth quarter, which included a $20.4 million expense related to its pending acquisition of Ally Financial's international operations. That net profit was down from $104 million a year earlier for the wholly-owned subsidiary of General Motors. The lender originated $1.2 billion in auto loans, unchanged from a year earlier, and $265 million in leases, down from $299 million a year earlier.
General Motors said in November that GM Financial would buy Ally's operations in Europe, China and Latin America. The $4.25 billion deal will double GM Financial's assets, to about $33 billion. GM acquired AmeriCredit in 2010 for $3.5 billion.
-- Jim Fuquay
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