GM back in profit on home ground

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The Independent Online
GENERAL MOTORS finally made money building cars in North America last year after almost five years of losses totalling more than dollars 18bn. The division earned dollars 427m in the fourth quarter of 1993.

The profit was not enough to prevent a bottom-line loss of dollars 982m on all North American operations in 1993. However, the manufacturer said it easily met its goal of breaking even before interest and taxes, making dollars 362m - a turnround of almost dollars 5bn from 1992.

But the car maker lost market share in North America and for the first time in recent memory now makes fewer than one in every three cars sold there.

In Europe, meanwhile, GM's Opel-Vauxhall vaulted into first place among West European car makers, capturing 12.7 per cent of a rapidly shrinking market.

While profits at GM Europe declined, GM's overall international operations remained strongly profitable - in contrast with most of its continental rivals and with Ford, which announced continuing European losses on Wednesday.

For the quarter GM's international automotive operations made a profit of dollars 270m compared with dollars 489m for the same period in 1992, buoyed by record profits in Latin America. For the year it earned profits after tax and interest charges of dollars 1.2bn overseas compared with dollars 1.5bn in 1992.

General Motors' other big divisions - Electronic Data Systems, its computer-services subsidiary, and the Hughes defence and electronics group - both reported strong results, while profits from its finance group, GMAC, slipped slightly.

Overall GM made a profit after tax and interest of dollars 1.2bn during the fourth quarter, or dollars 1.28 a share, compared with a consolidated loss of dollars 652m in the fourth quarter of 1992.

For the whole of 1993, GM made dollars 2.5bn profit after tax and interest, an almost exact reversal of its 1992 loss - excluding the huge dollars 20.8bn accounting charge it took that year - of dollars 2.7bn.

Results for both years were skewed by a variety of other large one-off charges, reflecting the company's recent difficulties, notably for plant closures, contract costs, payments to people taking early retirement, a write-down in its rental fleet sales, and a restructuring at Hughes.

GM's results were well above Wall Street's forecasts. But, as was the case on Wednesday with Ford, its share price came under strong selling pressure after the announcement.

GM's share price had risen more than 10 per cent in the past two days on speculation that it would match 1993 results from Chrysler that exceeded even the most optimistic estimates. GM's shares were trading off dollars 3 8 at dollars 637 8 late yesterday in New York.