DETROIT — General Motors’ net income fell slightly in 2016, but the automaker set a number of financial records during the year, earning more than $12 billion in pre-tax profits in North America, resulting in record profit-sharing payments for United Auto Workers union-represented employees.
“By nearly every measure, 2016 was a great year,” GM CEO Mary Barra said Tuesday after the company reported the results. “This underscores the progress we are making in strengthening our brands and putting our customers first in everything we do.”
After taxes, the automaker earned a global net income of $9.43 billion in 2016, a 2.6 percent decline from the $9.68 billion it earned the prior year.
The automaker beat analyst expectations with record earnings of $6.12 per share for the year, a 22 percent increase over 2015. For the fourth quarter, GM reported a profit of $1.28 per share.
Analysts, on average, expected GM to earn $6.01 per share for the year and $1.17 per share for the three months that ended Dec. 31.
Despite setting a variety of financial records, GM saw its stock fall $1.73, or 4.7 percent, to a close of $35.10 on Tuesday.
That’s because Wall Street is more focused on how GM will perform this year. With car sales declining, analysts are concerned about the automaker’s inventory. And with automakers confronting the rising cost of developing self-driving cars, analysts are also concerned about the company’s ability to meet its 2017 targets.
“Investor focus going forward will center around GM’s ability to meet its 2017 guidance of (earnings per share) of $6.00-$6.50,” Barclays analyst Brian Johnson said in a report. “Investors, and ourselves, have been somewhat skeptical of this guidance.”
GM Chief Financial Officer Chuck Stevens said, “We expect to see another strong year in 2017. We’re comfortable with the guidance we have in 2017 and we are going to get after it.”
Last week, GM said it will later this year idle for several weeks production at two plants in Lansing, Mich., and one in Lordstown, Ohio, where the Chevrolet Cruze is made.
Stevens said GM finished 2016 with a 71-day supply of cars and trucks, slightly above what the industry considers healthy. He said GM’s inventory will increase during the first few months of this year as the company prepares to launch several new SUVs.
“We will continue to be very disciplined on aligning supply and demand,” Stevens said.
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The automaker also said its global revenue topped $166.38 billion in 2016, compared with $152.36 billion last year as demand for its full-size trucks and SUVs increased, especially in North America.
But GM’s fourth-quarter net income fell 70 percent to $1.8 billion because of a one-time charge of $100 million related to legal costs tied to recalls and a $300 million loss due to unfavorable foreign exchange rates.
The company also faced an unfavorable comparison to the fourth quarter of 2015, when GM realized a benefit of $4 billion related to gains associated with its European tax assets.
In China, where GM is the largest automaker by volume, retail sales increased by 33,000 last year, mostly for its Baojun, Buick and Cadillac brands.
However, total sales in the region fell slightly from to 559,000 new vehicles from 588,000 the prior year.
GM’s pre-tax profit in Asia fell to $1.1 billion in 2016 from $1.4 billion the prior year.
In Europe, GM reported a pre-tax loss of $257 million compared with a loss of $813 million before.
In North America, GM earned a record $12 billion, compared with $11 billion last year, leading to the largest profit-sharing payment to U.S. workers in GM’s history.
The automaker’s lucrative profit sharing, which will be paid to 52,000 UAW-represented workers on Feb. 24, is part of a 2011 contract that updated the profit-sharing formula. The maximum pre-tax worker payout of $12,000 is not an average but the maximum the company’s workers who logged 1,850 hours will receive.
UAW workers receive about $1,000 in profit sharing for every $1 billion in profit, according to a formula adopted as part of contract negotiations in 2011. It’s a formula that has worked out well for workers in recent years and could cost the company as much as $624 million this year.
“Today’s performance bonus announcement of a maximum of $12,000 each rewards our members’ dedication and commitment to building some of the most popular and high-quality vehicles in the world,” said UAW Vice President Cindy Estrada. “They deserve every penny of that collectively bargained bonus check.”
GM workers received a maximum pre-tax profit payment of $11,000 last year and $9,000 in 2015. Workers received zero money in profit sharing from 2005 to 2009 when the automaker was struggling.
Ford said last month its UAW-represented workers will receive $9,000 on average in profit-sharing checks before taxes thanks to a near-record profit for the automaker. The size of the check is expected to be the second-largest in the history of the Dearborn, Mich., automaker. The Ford UAW workers will receive the money March 9.
Fiat Chrysler Automobiles said last month that UAW-represented workers will receive, on average, a $5,000 profit sharing check for 2016, or about $1,000 more than they did last year. The automaker’s 38,200 hourly workers and about 2,000 salaried workers represented by the union will receive their checks on Feb. 17.