* CFO: GM has not gone far enough cutting costs in Europe
* GM sees flat global market share in 2012
* Pension shortfall not as large as feared
* North American profit tops cautious expectations
* Shares up 4.25 pct
By Ben Klayman and Deepa Seetharaman
DETROIT, Feb 16 General Motors Co
posted a weaker-than-expected fourth-quarter profit on
disappointing performance in Europe and South America, but
its pension shortfall was smaller than some analysts had
The U.S. automaker made far more money in its home
market than Wall Street expected -- the North American unit's
adjusted earnings almost doubled, to $1.5 billion -- and its
shares rose 4.25 percent in morning trading.
Analysts gave the quarter mixed reviews. GM failed to
provide a detailed forcast for 2012 that some had hoped to
"A lack of guidance leaves GM shares shrouded in the
thick fog of macro uncertainty," Morgan Stanley analyst Adam
Jonas said in a research note.
Even so, GM had forewarned about the bad news in the
quarter. In Europe the company is racing to restructure Opel,
and it is playing catch-up with vehicle introductions in South
"We obviously have work to do still and a long way to get to
the objectives we ultimately want to get to," GM Chief Financial
Officer Dan Ammann told reporters.
"We clearly have work to do in Europe. 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," he added.
Ammann said GM has not gone far enough in cutting costs in
its European operations, but he declined to provide a 2012
financial forecast for a unit, which the No. 1 U.S. automaker
has struggled to return to profitability.
Overall, GM expects 2012 sales to top 2011's $150.3 billion,
and it sees little change in its market share.
GM's 2011 profit jumped 62 percent to a record $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.
Fourth-quarter net income attributable to common
shareholders was $500 million, or 28 cents a share, compared
with $500 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
Sales rose 3 percent to $38 billion, compared with the
$38.21 billion analysts had expected.
"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
For 2012, GM expects to raise vehicle prices, including
in North America, and contain cost inflation, but the sale
of more cars than trucks will hurt profit margins, the company
said. It also expects sales to increase from 2011 on
growing industry demand.
In the fourth quarter, growing sales of cars, which
offer lower profits than trucks, cut into margins, which fell to
2.9 percent from 6 percent in the third quarter.
"The big bounce was around costs in North America, more
than anything else," Citi analyst Itay Michaeli said.
"The question is can you reasonably contain that as you
go into the next couple of years when you launch your product?
If the answer is yes, then that's clearly a key advantage."
Profit in GM's international operations, which include
China, grew by a third to $400 million.
The company's Europe business saw a loss of $600
million in the quarter, including $200 million in restructuring
costs. JPMorgan analyst Himanshu Patel described the results as
"not a train wreck."
For the year, GM's Opel unit reported a loss of $700
million, an improvement of $1.3 billion over 2010. GM originally
aimed to break even in Europe but abandoned that target in
November as demand there deteriorated.
South America flipped to a loss of $200 million from a
$200 million profit a year earlier.
GM said its U.S. defined pension plans earned returns of
11.1 percent last year and ended 2011 with a $13.3 billion
pension funding shortfall, a smaller shortage than analysts
The automaker expects returns of 6.2 percent in
2012 due to a greater shift to fixed income investments.
The company said based on the North American profit
last year, it will pay profit sharing of up to $7,000 per worker
to about 47,500 hourly U.S. employees.
It ended the year with total automotive liquidity of
$37.5 billion, down from $38.8 billion at the end of the third
GM shares rose $1.06, or 4.25 percent, to $25.99 in
morning trade on the New York Stock Exchange.