New GM posts $4.6b loss

GENERAL Motors has posted a $US4.3 billion ($A4.639b) operating loss for its first six months as a newly formed company.

Highlighting the burden GM still faces to repay government investments in North America’s largest car-maker, the result is the first official announcement of GM’s financial health since it emerged from Chapter 11 bankruptcy in the US on July 10.

Despite the significant shortfall in the second half of 2009, the company continues to say it may return to profit this year and remains confident it will make its final US and Canadian government loan repayments five years ahead of schedule in June.

“We are building the foundation that will allow us to return to public ownership,” said GM vice-chairman and chief financial officer Chris Liddell. “Completing fresh-start accounting is an important step in that process.

“As the results for 2009 show there is still significant work to be done. However, I continue to believe we have a chance of achieving profitability in 2010.

“We are also dedicated to delivering on our commitments to our stakeholders. For example we remain committed to repaying the outstanding balance of the US Treasury and Export Development Canada loans by June 2010 at the latest.”

Left: GM chairman and CEO Ed Whitacre. Below: GM vice-chairman and chief financial officer Chris Liddell.

GM’s Q4 2009 financial statement follows the announcement of the company’s second quarterly loan payment of about $US1 billion ($A1.08b) to the US Treasury and $US192 million ($A207m) to the Canadian government on March 31. A total of $US8.1 billion ($A8.735b) was borrowed from both governments.

“While we have more work to do, GM is building high-quality, award-winning vehicles, our direction is clear and our plan is working,” said GM chairman and CEO Ed Whitacre last week.

“Given the progress the company is making, GM has every confidence that the remainder of the loans will be paid in full by June 2010 five years ahead of schedule.”

GM said it spent $US1.9 billion ($A2.05b) in operating cash in the last three months of 2009, including repayments to governments that rescued it during its restructuring.

GM's net loss also reflected a $US2.6 billion ($A2.8b) cost related to a union retiree medical plan and a $US1.3 billion ($A1.4b) recalculation in foreign currency values.

Combined with its third-quarter result, post-bankruptcy GM generated $US1 billion ($A1.08b) in the second half of 2009, when the company posted its fifth consecutive annual operating loss.

GM said improving passenger vehicle sales in the US and increased demand for some GM models will soon see six of its 16 North American plants working more than two 40-hour shifts a week.

Last year vehicle sales in the US totalled 10.4 million but after March this year stand at a seasonally adjusted annual rate of 11.7 million for 2010.

“We don't need the industry to be significantly better to achieve profitability,” said Mr Liddell. “Having said that, in the way the year is shaking out, the industry is looking better and that's certainly helping.”

GM’s worldwide market share was 11.6 per cent in 2009 – down from 12.4 per cent in 2008. In the US, its share fell to 19.6 per cent, from 22.1 per cent.

GM produced 6.5 million cars and trucks worldwide in 2009 – down from 8.1 million in 2008.