GM reports higher-than-expected profit despite recall costs

Wed Feb 4, 2015 10:54am EST
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By Bernie Woodall

DETROIT (Reuters) - General Motors Co (GM.N: Quote) on Wednesday posted fourth-quarter earnings far above analysts' expectations as strong sales of high-margin SUVs and trucks in North America helped offset record recall costs there, and its shares rose 3 percent.

Chief Financial Officer Chuck Stevens told reporters that profitability would improve in all geographic markets in 2015 and that the company was "very much on the path to 10 percent margins (in North America) in 2016."

North American profit margins for 2014 were 6.5 percent. Excluding the additional costs for a record vehicle recall, they would have been 8.9 percent, GM said.

GM said it planned to raise its dividend by 20 percent, a move many shareholders have been pushing the company to do.

Stevens told Reuters that further return of capital to investors could happen later this year, as soon as the company resolves legal issues involving the recall of a defective ignition switch linked to at least 51 deaths.

Excluding special items, the largest U.S. automaker earned $1.19 per share in the quarter, compared with the analysts' average estimate of 83 cents, according to Thomson Reuters I/B/E/S.

Net income rose to $1.1 billion, or 66 cents a share, from $900 million, or 57 cents a share, a year earlier.

Without the recall costs, 2014 operating profit of $6.5 billion would have been $2.8 billion higher and net income per share of $1.65 would have been $1.07 higher, GM said.   Continued...

A man walks past a row of General Motors vehicles at a Chevrolet dealership on Woodward Avenue in Detroit, Michigan April 1, 2014. REUTERS/Rebecca Cook