GM hourly workers will get bonus checks of up to $12000 – USA TODAY
For the year, GM’s net income fell 2.6% from $9.68 billion a year ago even as its total revenue increased.
Hourly workers for General Motors will get record bonus checks of up to $12,000 after the company reported booming sales in North America, as consumers flock to high-profit trucks, crossovers and pickup trucks.
The profit-sharing checks owed to GM’s 52,000 United Auto Workers-represented workers are based on a simple formula. They get about $1,000 for every $1 billion in annual pre-tax North American profit, according to a formula adopted as part of contract negotiations in 2011.
Record U.S. industry vehicle sales powered GM to a $12 billion North American profit in 2016, up from $11 billion a year earlier.
The company said Tuesday that its overall net income fell slightly in 2016 to $9.43 billion because of one-time charges.
But the automaker beat analyst expectations with profit of $6.12 per share for the year and $1.28 per share for the fourth quarter.
Analysts, on average, expected GM to earn $6.01 per share for the year and $1.17 per share for the three months ending Dec. 31.
“By nearly every measure 2016 was a great year,” GM CEO Mary Barra said. “This underscores the progress we are making in strengthening our brands and putting our customers first in everything we do.”
Wall Street, however, is more focused on how GM will perform this year and analysts have concerns about the automaker’s inventory and ability to meet its 2017 targets.
Barclays analyst Brian Johnson said in a report that “investors, and ourselves, have been somewhat skeptical of” the company’s profit projections.
GM’s stock fell $1.64 per share, or 4.5%, by mid-morning to $35.19.
The automaker said its global revenue topped $166.38 billion in 2016, compared with $152.36 billion in 2015, as demand for its full-size trucks and SUVs increased, especially in North America.
GM’s fourth-quarter net income fell 70% to $1.8 billion because of one-time charges of $100 million related the legal costs tied to recalls, unfavorable foreign exchange rates and an unfavorable comparison to the same quarter in 2015 when the company realized a gain of $4 billion in gains for its European assets.
As investors fret about inventory levels, GM Chief Financial Officer Chuck Stevens said GM will carefully manage its inventory.
“We expect to see another strong year in 2017,” Stevens said. “We’re comfortable with the guidance we have in 2017 and we are going to get after it.”
Since cars are selling slowly amid rising demand for SUVs, Stevens said GM will shift its capital spending in 2017 into SUVS, trucks and crossovers.
“We are allocating more capital to growth and profit pools where we think we can earn a long-term return and less to those areas that we can’t,” he said.
Follow Detroit Free Press reporter Brent Snavely on Twitter @BrentSnavely.