Thanks to the strong sales of high-margin trucks and SUVs in North America, General Motors was able to offset its recall cost that’s why its shares went up by 3%. The earnings it recorded for the fourth quarter was far above the expectations of analysts.
The Chief Financial Officer of the company, Chuck Stevens, said that GM’s profitability would go up in all its markets for the year 2015 and that it’s very much likely to reach the 10% margins in 2016 in North America.
For North America, the company’s profit margins for the previous year were 6.5% excluding the recall costs which would have made it record the profits margins at 8.9%.
General Motors told reporters that it has been planning to increase its dividends to up to 20% which is a move that a lot of the company’s shareholders have been pushing GM to do.
Stevens said that the increase of shareholder dividends will likely happen late this year as soon as General Motors solves its issues regarding the recall of a defective ignition switch that is said to have led to more than 50 deaths.
Not including special items, General Motors earned $1.19 a share during the fourth quarter which is far above compared to the analysts’ estimates of $0.83 cents. The net income of the largest automaker in the U.S. increased to $1.1 billion which is equivalent to $0.66 cents per share. This went up compared to its net income a year earlier of $900 million or $0.57 cents per share.
Excluding the recall costs, the company’s operating profit for the year 2014 of $6.5 billion would have been higher by $2.8 billion and its net income of $1.65 per share would have been higher by $1.07, General Motors said.
Just like what happened in the past, most of the quarterly earnings for the company were from North America which according to Stevens, is due to the higher sales of pickup trucks and full-sized SUVs.
Meanwhile, the company posted a quarterly operating loss of $400 million in Europe which didn’t change from the previous year. Its yearly loss in Europe went up to $1.4 billion compared to that of the previous year which was $900 million.