ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, January 31, 1996 TAG: 9601310056
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: DETROIT
SOURCE: Los Angeles Times
General Motors Corp. on Tuesday reported record fourth-quarter earnings of $1.6 billion, highlighting its continuing turnaround in the face of a weaker auto-sales market worldwide.
But the results were inflated by one-time tax gains, and analysts said GM's profits are likely to fall this year as it is hit with higher marketing costs and the expense of launching several all-new models.
GM, the world's largest automaker, said all parts of its business - North American and international vehicle production as well as electronics, computer services and financial subsidiaries - showed improvement in 1995 and in the year's final quarter.
The company's quarterly profit was up 19 percent from a year ago and its yearly earnings soared 40 percent to $6.9 billion. Both the fourth-quarter and yearly profits set new records established just a year ago.
GM, whose once-staggering North American car and truck business drove the company to the brink of financial disaster four years ago, benefited from an improved performance in its automotive operations and lower tax rates.
``We are particularly pleased with the continued improvement in our North American operations,'' said John F. ``Jack'' Smith Jr., GM chairman and chief executive officer.
For the second consecutive year, GM reported profits in its North American automotive operations, which lost $18 billion from 1990 to 1993. It earned $2.4 billion last year and $677 million in 1994.
GM said the lower tax burden was largely due to the settlement of several outstanding tax issues overseas dating back as much as 10 years and to a greater contribution of earnings from countries with lower taxes.
GM is the second of the three U.S.-based automakers to report earnings. Chrysler also posted better-than-expected fourth-quarter earnings of $1 billion, bringing full-year profits to $2 billion. Ford Motor Co. is to report today, and analysts expect its fourth-quarter performance to be weaker than its competitors.
GM's fourth-quarter earnings of $1.9 billion, or $1.98 per share, compare with $1.6 billion, or $1.74 a share, a year ago. The $6.9 billion full-year profit, $7.21 a share, compares with $4.9 billion, or $5.15 per share, in 1994.
Fourth-quarter sales rose 3 percent to $43.9 billion; 1995 revenues climbed 9 percent to $169 billion.
But there are warning signs. The company's vehicle inventories have climbed well above normal, which in recent weeks has forced it to cut back production of some slow-selling models. Analysts expect slow sales to force the company to increase rebates, cutting into 1996 profits.
LENGTH: Medium: 55 linesby CNB