* North American profit tops cautious expectations
* Pension shortfall not as large as feared
* CFO: GM has not gone far enough cutting costs in Europe
* GM sees flat global market share in 2012
* Shares up 6.5 pct (Adds CFO comments, analyst and German union comments, updates stock price)
By Ben Klayman and Deepa Seetharaman
DETROIT, Feb 16 (Reuters) - General Motors Co’s ability to raise U.S. vehicle prices and better-than-expected pension returns offset weakness in the fourth quarter in Europe and South America, sending shares up more than 6 percent.
The stock rise also reflected investor relief that the results were not worse, given that GM lost $747 million in Europe last year. For the fourth quarter, analysts gave the world’s biggest automaker mixed reviews.
Fourth-quarter earnings were roughly flat from a year earlier and missed Wall Street expectations. GM also failed to provide the more detailed forecast for 2012 that some had hoped to hear.
“The results were ‘shaken, not stirred,'” Guggenheim Securities analyst Matthew Stover said in a research note. “In other words, they were a little worse than consensus but certainly not as bad as the worst case outcome.”
GM Chief Executive Dan Akerson said the U.S. automaker is focused on tackling the problems in Europe and South America, the two markets that dragged on fourth-quarter results. GM lost $562 million in Europe and $225 million in South America. By contrast, it earned $1.5 billion in its home market.
“We clearly have work to do in Europe,” GM Chief Financial Officer Dan Ammann told reporters. “We have work to do in the South America business. Frankly, we have work to do all around the company in terms of cost opportunity.”
Overall, GM expects 2012 sales to top 2011’s $150.3 billion, and it sees a flat global market share.
For 2011, GM’s profit jumped 62 percent to $7.6 billion. It was the company’s first full year of operations since its initial public offering in the fall of 2010. GM reorganized with the help of a $50 billion U.S. government bailout and a 2009 bankruptcy.
The Obama administration’s bailouts of GM and Chrysler Group LLC, which is majority-owned by Italy’s Fiat SpA, are the subject of political debate in the runup to this year’s presidential election. Republican candidate Mitt Romney this week urged the U.S. Treasury to sell its nearly one-third stake in GM.
Fourth-quarter net income was $472 million, or 28 cents a share, compared with $510 million, or 31 cents a share, in the year-ago quarter.
Excluding one-time items, GM earned 39 cents a share, 2 cents below analysts’ average forecast in a poll by Thomson Reuters I/B/E/S. Earnings before interest and taxes were in line with Wall Street’s expectations.
GM’s ability to raise prices on its vehicles added $800 million in earnings to the quarter.
Sales rose 3 percent to $38 billion.
“The good news is they’ve done a nice job getting North America back on track; the bad news is the rest of the world,” Edward Jones analyst Matt Collins said.
“In order to get the stock moving again, they really need to address international profitability and the pension,” he added.
Even with the 6.5 percent stock rise on Thursday, GM shares trade about 20 percent below their November 2010 IPO level of $33.
For 2012, GM expects to raise vehicle prices and hold costs in line after announcing its U.S. salaried workers would not receive an automatic pay raise.
But GM also said it expected profits to take a hit from the growing trend toward smaller, and lower-margin cars rather than more lucrative trucks like the Chevrolet Silverado. That drag on profit will be smaller in 2012 than it was last year, Ammann said.
One of the key questions for GM investors has been its troubled Opel unit, a business it opted to keep in 2009 when then-CEO Ed Whitacre scotched a planned sale.
In recent months, Vice Chairman Steve Girsky has taken charge of the Opel restructuring, and GM said it would detail further steps soon. The cost for the Opel restructuring was $200 million in the fourth quarter.
JPMorgan analyst Himanshu Patel described GM’s European results as “not a train wreck.”
For the year, Opel reported a loss of $700 million. GM had originally aimed to break even in Europe but abandoned that target last fall as the European debt crisis deepened.
Ammann said GM was working with union leaders at Opel to cut costs and improve efficiency in Europe within the framework of the current contract that runs through 2014 in Germany.
On Thursday, Opel union leaders urged GM to shift production of Opel vehicles from South Korea to Europe.
GM said its U.S. defined pension plans earned outsized returns of 11.1 percent last year and ended 2011 with a $13.3 billion pension funding shortfall.
The automaker expects returns of 6.2 percent in 2012 due to a shift to investments in bonds.
Ammann also said GM was exploring other actions to further reduce its pension risk, but has no plans to contribute to the plans at this time.
GM announced on Wednesday that it was ending its traditional pension for 19,000 U.S. salaried workers. The automaker and the United Auto Workers union have agreed to negotiate potential changes to the larger pension plan for factory workers.
GM said it would pay profit sharing of up to $7,000 per worker to about 47,500 hourly U.S. employees.
The automaker, which has said it remains focused on preserving a “fortress balance sheet” to carry it through the industry’s next bust, ended the year with total automotive liquidity of $37.5 billion, down from $38.8 billion at the end of the third quarter.
GM shares were up 6.5 percent at $26.55 on Thursday afternoon on the New York Stock Exchange. (Reporting By Ben Klayman and Deepa Seetharaman; Editing by Maureen Bavdek, John Wallace and Matthew Lewis)