Record profit of $7.6B for GM

Staff/wire reports

DETROIT

General Motors earned its largest profit ever in 2011, two years after it nearly collapsed.

Strong sales in the U.S. and China helped the carmaker turn a profit of $7.6 billion, beating its old record of $6.7 billion in 1997 during the pickup and SUV boom.

GM is a vastly different company than it was back then. It’s smaller, has less debt, and its contract with the United Auto Workers is less costly.

But it took a $49.5 billion government bailout and bankruptcy protection in 2009 to cut its bloated costs. The company earned a huge profit even though U.S. sales of cars and trucks were near a historic low of 12.8 million.

Those sales, however, were buoyed by the Lordstown-built Chevrolet Cruze. GM sold more than 230,000 Cruzes in 2011.

“It’s a source of great pride,” said Tom Mock, spokesman at GM Lords-town. “But we still have a lot of work to do.”

This year, GM expects to increase its revenue as global sales grow and it charges more for models.

Its ongoing effort to cut costs and take advantage of its global presence also is paying off. In the fourth quarter, costs fell by $500 million. It saved $100 million by cutting some of the dozens of advertising agencies and media managers it uses. It also saved $100 million by centralizing engineering.

“We will build on these results as we bring more new cars, crossovers and trucks to market,” CEO Daniel Akerson said.

GM’s stock price rose $2.24, or 8.99 percent, to close at $27.17 in Thursday trading.

That’s good news for the U.S. government, which still owns 26.5 percent of the company and needs the stock price to rise significantly before it can recoup all of the bailout money. The bailout and GM’s performance already are contentious issues in this year’s presidential campaign.

Still, problems emerged for GM late last year. Its fourth-quarter profit fell 8 percent and missed Wall Street expectations. Europe and South America reported losses. And sales growth in the U.S. slowed even as more Americans bought cars and trucks.

This year, GM expects to make less money per vehicle as the mix of sales shifts to cars from trucks, which have bigger sticker prices.

Still, last year was a big success for the company.

Revenue rose 11 percent to $150 billion. Its per-share profit was $4.58. GM made the bulk of its income in North America, where its pretax profit totaled $7.2 billion. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down.

GM sold 9.03 million cars and trucks around the world in 2011, up 7.6 percent from the year before. That helped it reclaim the title of world’s largest automaker from Toyota Motor Corp.