General Motors on Tuesday reported pretax profit gains of $1 billion in the fourth quarter to $3.79 billion. For the full-year, pretax profits rose to $14.5 billion compared with $14.3 billion in 2021.
GM's overall gains came from improved inventory of pickups and SUVs as parts constrictions eased. GM sold a total of 1.1 million full-size pickups, midsize pickups and full-size SUVs for the year, all of which carry big profit margins.
GM said it incurred a special charge of $511 million in the fourth quarter related to a buyout program for its Buick dealers. It also took a special charge of $657 million for closing its operations in Russia.
GM's challenge to leaders in 2023
GM CFO Paul Jacobson said the company will start a $2 billion cost-savings program over the next two years, with 30% to 50% of it happening this year. It includes cutting expenses and overhead as a precaution against an economic downturn. But he said, “I want to be clear, we are not doing layoffs.”
GM will achieve much of the savings from attrition. "Our headcount will be down slightly from where we are (today), just by managing attrition so this is a general challenge to all the leaders,” Jacobson said. “When we see attrition, we need to find ways to find more efficiency than just hiring. We’ll still hire, but only in our high priority areas.”
For 2023, GM said it expects its core auto operations to perform at "a consistently strong level," with full-year net income between $8.7 billion to $10.1 billion and adjusted pretax profits of $10.5 billion-$12.5 billion.
The 4th quarter in a snapshot
GM, which owns the Chevrolet, Buick, GMC and Cadillac brands, reported a gain in global revenue to $43.1 billion compared with $33.6 billion in the year-ago quarter. The results beat Wall Street expectations. Zacks Consensus Estimate expected GM to post revenues of $41.54 billion.
More:GM reports $14.3 billion in 2021 earnings despite COVID-19, chip shortage
GM reported net income rose to $1.9 billion compared with $1.7 billion. GM held its title as the top-selling carmaker in the United States in the fourth quarter with total U.S. sales rising 41.4% year-over-year to 623,261 vehicles. All of GM's brands reported sales gains except for Buick.
In China, GM's second most important market, GM and its joint ventures recorded a net revenue decline for the quarter to $10.4 billion compared with $13.6 billion a year-earlier due to the effects of COVID-19-related restrictions there in the first half of the year.
The full year in a snapshot
For the year, GM's global revenue was $156.7 billion compared with $127 billion for 2021. GM's annual net income dipped slightly to $9.9 billion compared with $10.02 billion in the year-ago period. GM reported adjusted earnings before interest and taxes of $14.5 billion, up from $14.3 billion. GM's new vehicle sales in the U.S. rose 3% to 2,274,088 new cars sold compared with 2021.