DETROIT -- General Motors reported a fourth-quarter net loss of $4.8 billion on Thursday, far worse than Wall Street expected.
GM executives listed high costs, shrinking market share and poor SUV sales as reasons for the loss.
It was the fifth straight quarterly loss for GM and brought its losses for all of 2005 to $8.6 billion.
GM executives cautiously forecast improved results for 2006 amid cost cuts and optimism that new products this year will sell well. GM stopped short of giving guidance, though.
"Frankly, the losses are quite clear: They're very large and they're substantially in North America," said CFO Fritz Henderson in a conference call to reporters and analysts. Henderson says GM's losses are "unacceptable" and demonstrate the company's urgency to execute its turnaround plan.
GM's huge losses punctured optimism created by Ford Motor Co.'s better-than-expected results released Monday.
"The numbers are much worse than I thought they would be, especially given how Ford beat the estimates earlier this week," Argus Research analyst Kevin Tynan said. On Monday, Ford Motor reported a surprising 19 percent rise in fourth-quarter earnings.
GM executives remain cautious on 2006 expectations. Henderson cited the need for GM's new products, especially full-sized trucks and SUVs, to sell well this year. He said GM has strong cash liquidity of $25 billion. That, combined with $6 billion in structural cost cuts and $1 billion in material cost cuts, should help boost results over the next two years, he said.
"We do expect substantial improvement in North American results in 2006 and 2007 on a pre-tax basis," Henderson says. "There's really no other choice."
GM shares dropped 80 cents, or 3.35 percent, to $23.05 in early trading on the New York Stock Exchange. The company's 8.375 percent bonds due in 2033 were quoted at 72.5 cents on the dollar, down 0.5 cent, according to MarketAxess.
The earnings report came a day after news that billionaire investor Kirk Kerkorian had raised his stake in GM to 9.9 percent. Kerkorian has called for sweeping changes at the auto giant, and a key adviser has suggested he might be prepared to organize a fight for control of the GM board.
GM's fourth-quarter loss compared with a year-earlier loss of $99 million. Excluding one-time items, the company posted a loss of $1.2 billion for the quarter.
One-time items reduced earnings by $3.6 billion. They included a restructuring charge of $1.3 billion at GM's North American operations, and a preliminary aftertax charge of $2.3 billion related to a benefit guarantee with the UAW and bankrupt auto parts supplier Delphi Corp.
Analysts were expecting charges after GM in October announced plans to slash 30,000 jobs and close 12 facilities, but no one knew how large the charges would be. Fourth-quarter revenue fell to $51.2 billion from $51.4 billion a year earlier.
"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue," CEO Rick Wagoner said in a statement.
GM earlier this month said it expects to cut North American structural costs by $6 billion by year end.
Part of those cost cuts includes taking some hourly workers out of GM's jobs bank, which requires that laid-off workers be paid, Henderson says. While he would not give figures as to how much money that will save GM, he said it was the appropriate action to take, given that GM would be closing plants.
No cost savings benefits from eliminating people from the job bank are available beyond 2007, Henderson says. In October 2007, GM's contract with the UAW expires. The future of the jobs bank is expected to be a major issue during next year's contract talks.
"The ultimate cost on how we handle these people is a function of what we can handle with the UAW, whether it's buyouts or redeployments to places that need people, but we do expect a savings by taking these people out of the system." Henderson said.
GM said its automotive operations lost $1.5 billion in the fourth quarter, driven by large losses in North America, where it has been losing market share to foreign rivals such as Toyota Motor Corp.
General Motors Acceptance Corp., the company's finance unit, posted net income of $614 million, down from $683 million a year earlier.
The automaker plans to sell a controlling stake in its finance arm in order to restore the unit's investment-grade ratings. Both GM and GMAC have said talks with potential partners are ongoing.
Reuters contributed to this report
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