GM profits down, earnings up in 4th quarter

DETROIT — Financing operations and asset sales propped up earnings at General Motors Corp. in the fourth quarter as profits from the automotive business fell, but the company beat Wall Street earnings estimates and provided an optimistic outlook for 2004.

The world's largest automaker said Tuesday its net income for the October-December period equaled the $1 billion it earned in the same period a year earlier. The most recent quarter's results, also boosted by special items, amounted to $2.13 a share, compared with $1.71 a share in the fourth quarter of 2002.

Revenue rose to $49.1 billion from $45.6 billion a year earlier.

But global automotive profits were off 31 percent from strong results in the fourth quarter of 2002 when GM used heavy consumer incentives to post extremely robust sales and meet U.S. market-share goals.

GM's global market share declined to 14.7 percent last year from 15 percent in 2002. U.S. market share for 2003 was 28 percent, down from 28.3 percent a year earlier.

"While overall market share was down, we were pleased with our sales momentum in the second half of 2003," GM chairman Rick Wagoner said in a statement. "As we continue our aggressive new-product cadence, we're optimistic about increasing market share in 2004."

GM is scheduled to introduce 12 all-new vehicles in the United States this year.

GMAC, the company's financing arm, earned $630 million in the fourth quarter — a fourth-quarter record. For the year, GMAC reported income of $2.8 billion, up from $1.9 billion in 2002. Income from mortgage operations more than doubled, but many observers say that side of the business is likely to moderate this year as the wave of mortgage refinancing fades and national fiscal policy likely tightens.

Merrill Lynch analyst John Casesa said GMAC's earnings accounted for roughly three-quarters of the automaker's total net income in the fourth quarter, yet he lauded the company's overall performance given the difficult pricing environment because of costly rebates and financing deals to spur sales.

GM and other major automakers have said they hope an improving economy and other factors will allow them to scale back incentive offers this year, though no one has backed off yet.

"GM's fundamentals are improving steadily in the face of an increasingly competitive environment," Casesa said in a research note. "However, the difficulty of reducing incentives in an overcrowded North American market is a major factor limiting margin expansion."