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GM posts $9.6B loss for 4Q

26 February 2009 16:43 (UTC +04:00)

Bakuâ€“ APA-Economics. General Motors Corp. posted a $9.6 billion fourth-quarter loss and said it burned through $6.2 billion of cash in the last three months of 2008 as it fought the worst U.S. auto sales climate since 1982 and sought government loans to keep the century-old company running.
The nation’s biggest domestic automaker said Thursday it lost $30.9 billion for the full year and expects to state in its upcoming annual report whether its auditors believe the company remains a "going concern."
The company has received $13.4 billion in federal loans since Dec. 31 and says it needs up to $30 billion to stay out of Chapter 11 bankruptcy protection. Top GM executives were in Washington, D.C., Thursday to meet with the Obama administration’s auto task force to talk about restructuring and additional loans.
AP quoted Chief Financial Officer Ray Young as saying auditors are studying the future of the company because "there’s uncertainty with how the Treasury will view our viability plan," and "uncertainty on whether we’re going to be able to execute the terms of our loan agreement."
Young said GM would reduce its structural costs by another $4.5 billion in 2009, from $30.8 billion to $26.3 billion.
GM’s adjusted cash burn for the year in 2008 was $19.2 billion, but Young expects that to fall to $14 billion in 2009 due to restructuring efforts.
But even with the structural cost reductions, the company still expects U.S. sales overall to be a dismal 10.5 million vehicles, so it will need more government help, he said.
Most of the cash burn this year will take place early when the company shut down many of its plants, he said.
GM reported a net loss of $15.71 per share for the fourth quarter, compared with a loss of $722 million, or $1.28 per share in the year-ago period.
Quarterly revenue fell 39 percent to $30.8 billion from $46.8 billion, as credit availability froze across the globe, and a lack of consumer confidence and fears of job losses kept people from buying vehicles.
GM’s fourth-quarter loss included $3.7 billion in special items, including a $1.1 billion charge for a drop in value of machinery for the Hummer and Saab brands, which are up for sale. Other charges included $900 million for restructuring, including worker buyout and early retirement payments, and $660 million to increase reserves for former parts arm Delphi Corp.’s future pension obligations.
The charges were offset by a $533 million net gain from a bond exchange at GM’s financial arm, GMAC Financial Services.
Excluding special items, GM’s fourth-quarter adjusted loss was $5.9 billion, or $9.65 per share.
That was worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a quarterly loss of $7.40 per share on sales of $35.1 billion.
For the full year, GM’s net loss was $53.32 per share, the second-worst annual result in the company’s history. The worst loss occurred in 2007, when the Detroit-based company lost $38.7 billion, or $68.45 per share, in 2007, due largely to charges for unused tax credits.
GM’s cash burn rate, the difference between how much it takes in and how much it spends, narrowed slightly from $6.9 billion in the third quarter, reflecting GM’s restructuring efforts.
The company last year announced the closure of four assembly plants and a parts stamping factory.