Second worst for company
Slammed by crashing sales, General Motors Corp. said Thursday that it lost $9.6 billion in the fourth quarter and $30.9 billion for all of 2008, its second-worst year on record.
The results, which more than doubled dismal analyst expectations, were further evidence of the dire situation the Detroit automaker finds itself in. It has already received $13.4 billion in government loans to stay afloat, and this month requested an additional $16.6 billion in taxpayer-funded bailout cash.
The money is needed, the automaker said, because it is losing money at such a fast rate that it would soon be unable to fund operations and become financially insolvent. In the fourth quarter, GM said, it burned through $6.2 billion in cash, or more than $2 billion a month, and for all of 2008, it reduced its cash hoard by $19.2 billion.
GM ended 2008 with $14 billion in cash, including $4 billion it had received from the Treasury Department. A year earlier, it had $30 billion in liquidity reserves on hand, and the huge and rapid decline is a testament to the challenges the company faces.
Company officials said Tuesday that they were expecting to receive a “going concern” notice from GM’s auditors in response to its annual filings. That would indicate the auditors’ concern that the automaker is unable to continue operations from a financial point of view.
Calling last year “extremely difficult,” GM Chairman and Chief Executive Officer Rick Wagoner said he expected “these challenging conditions will continue through 2009.”
Wagoner was in Washington Thursday to meet with Obama administration officials regarding the company’s new funding request in the revised turnaround plan it submitted last week.
As part of that plan, GM pledged to eliminate 47,000 jobs worldwide this year, dramatically reduce production and cut four brands from its U.S. lineup, as well as renegotiate terms with its unions and bondholders.
GM lost $15.71 a share in the fourth quarter, compared with a year-earlier shortfall of $1.28 a share, or $722 million. Its revenue in the period fell 34 percent, to $30.8 billion from $46.8 billion, as sales plummeted in North America, Europe and even some high-growth emerging markets.
Analysts had expected the quarterly loss to reach $7.40 a share.
For the full year, revenue decreased 17.2 percent, to $149 billion, and GM’s U.S. vehicle sales volume was down 23 percent in 2008.
The yawning $30.9-billion loss, or $53.32 a share, was the second worst in the automaker’s history, after 2007, when GM lost $43.3 billion largely because of a tax-related accounting charge.
GM has been in some form of restructuring since Wagoner was named CEO in 2000. Since then, GM’s stock has lost more than 95 percent of its value, and the company has surrendered significant market share in the U.S. Last year, for the first time, it ceded the title of the world’s largest automaker to Toyota and saw its share of the worldwide car market drop to 12.4 percent from 13.3 percent.
GM lost money in each of its four worldwide regional markets, including long-profitable Latin America, where a $1.3-billion revenue decline led to a $181-million loss for the quarter. GM also lost $1.9 billion in Europe and $917 million in Asia.
“We really noted in the fourth quarter the contagion that started in the U.S. … the credit crisis, really spreading around the world and having an impact,” said Ray Young, GM’s chief financial officer.
But it was in the company’s most important market, North America and particularly the U.S., where it was worst hit. Revenue in the region fell 31 percent, to $19.3 billion, compared with a year earlier, leading to a $2.1-billion loss.
Car sales fell dramatically in the U.S. after the first quarter of last year, and GM’s losses began soaring shortly thereafter.
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