ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Wednesday, January 29, 1997 TAG: 9701290092
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: DETROIT
SOURCE: Los Angeles Times
General Motors Corp. reported a 51 percent decline in fourth-quarter earnings Tuesday and lost money on its North American vehicle operations, mostly because of U.S. work stoppages and increased costs of new-model introductions.
Strikes at several plants during last fall's contract negotiations with the United Auto Workers reduced the automaker's quarterly earnings by $700 million. For the year, GM said UAW strikes reduced earnings by $1.2 billion.
GM's profits were further squeezed by higher marketing costs for 15 newly launched cars and trucks. The nation's No. 1 automaker is banking on the new products to spur sales and stanch its market-share losses in 1997.
``The quarter was ruined by the strikes,'' said analyst David Healy of Burnham Securities in New York. ``But even without the strikes, the profit margins were disappointing.''
GM's quarterly profits from continuing operations were $786 million, or 92 cents a share, down from $1.59 billion, or $1.95 a share, a year ago. The results exclude Electronic Data Systems, which GM split off in June.
Earnings for the year were down 17 percent. GM earned $5 billion last year from continuing operations, compared with $6 billion in 1995. Revenues were down slightly in the fourth quarter but up 2.4 percent for the year, to $164.1 billion.
The operating results, excluding some favorable tax gains, were in line with Wall Street expectations. GM stock fell 1 1/8 to close at 60 3/4 in trading Tuesday on the New York Stock Exchange.
The impact of the strikes and vehicle launches hit the company's core North American auto operations hard. GM lost $124 million in North America in the fourth quarter, compared with a profit of $603 million a year ago.
While the labor and product disruptions hurt the financial results, GM is much stronger financially than just a couple of years ago, when its U.S. auto operations were hemorrhaging red ink. GM finished 1996 with $17 billion in cash, prompting the decision Monday to increase its dividend and begin a $2.5 billion stock buyback plan.
The company's future financial health rides, in part, on its ability to maintain labor peace. GM has been hit with several crippling local strikes in the past year and still has about 40 local contracts unsigned, raising the threat of more unrest.
LENGTH: Short : 50 linesby CNB