GM posts record $7.6 billion profit in 2011

DETROIT – Just two years after it was rescued and reconstituted through bankruptcy and a government bailout, General Motors Co. cruised through 2011 to post the biggest profit in its history.

The 103-year-old company cut costs by taking advantage of its size around the globe. And its new products boosted sales so much that it has reclaimed the title of world’s biggest automaker from Toyota.

GM may have a hard time breaking this record in 2012 because it is losing money in Europe and South America, and U.S. sales growth slowed in the last three months of 2011.

But the company’s performance in North America and Asia still helped it earn $7.6 billion for the year, beating the record of $6.7 billion set in 1997.

GM, which released its earnings Thursday, performed best in its home territory, posting a $7.2 billion pretax profit in North America. The numbers were so good that 47,500 blue-collar workers will get $7,000 profit-sharing checks, the maximum allowable under their new union contract. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down from 2010.

GM’s cost cuts and its outlook for this year helped to push up the stock price by almost 9 percent, to $27.08. The company said it trimmed costs by $500 million in the fourth quarter alone mainly by consolidating advertising agencies and engineering operations. A prediction that costs wouldn’t rise this year wowed investors, especially since other automakers have forecast rising costs, said Itay Michaeli, an analyst for Citi Investment Research.

The government owns 500 million shares of GM, which it got in exchange for a $49.5 billion bailout. Through earlier stock sales and loan repayments, the government has recouped about $22.3 billion of that money.

The bailout of GM and Chrysler Group LLC was begun by President George W. Bush and finished by President Barack Obama.