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News of January 25, 2000
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GM Reports Record Annual Revenues Of $176.6 Billion For 1999 Revenue
Growth Drives Record Annual Earnings Of $8.53 Per Share
DETROIT - Record calendar-year revenues and earnings were reported today by General Motors Corp. on continued strong performance by its automotive operations and record earnings at General Motors Acceptance Corp. (GMAC).
GM's consolidated net sales and revenues totaled a record $176.6 billion in calendar-year 1999, an increase of 13.6 percent compared with the prior year when revenues were $155.4 billion.
The revenue growth in 1999 helped drive a record $8.53 diluted earnings per share of GM $1-2/3 par value common stock for the calendar year, compared with $4.32 per share in 1998. Income during 1999 totaled $5.6 billion, compared with $3.0 billion in the prior year.
Excluding special items, 1999 income totaled a record $5.7 billion, or $8.62 per share. GM's global automotive operations generated record income of $5.0 billion in 1999, driven by GM North America's record income of $4.8 billion. GMAC had record income totaling $1.5 billion in 1999. GM's fourth-quarter-1999 revenues totaled $46.3 billion, compared with $44.6 billion in 1998.
Income for the fourth quarter of 1999 totaled $1.1 billion, or $1.86 per share, compared with $1.7 billion, or $2.48 per share, in the prior-year period.
"We're pleased that our financial performance remained on track even as we faced unceasing competitive pressures," said GM Chairman and Chief Executive Officer John F. Smith, Jr. "Record market demand in North America and Europe fueled increased sales of GM vehicles in these intensely competitive markets, while we continued to be affected by economic pressures in Latin America and the Asia-Pacific region. We're particularly gratified by the record performance of our automotive operations in North America, and GMAC," he said.
Cash, marketable securities, and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in short-term fixed-income securities totaled $14.4 billion at Dec. 31, 1999, compared with $13.1 billion at Dec. 31, 1998, and $16.7 billion at Sept. 30, 1999. These cash amounts exclude GM's financing and insurance operations.
During the fourth quarter of 1999, GM repurchased 23.3 million shares of its $1-2/3 par value common stock worth $1.6 billion. Since January 1997, GM has repurchased approximately 140 million shares of GM $1-2/3 par value common stock worth $9.0 billion, or more than 18 percent of the total shares outstanding.
The corporation's 1999-calendar-year return on net assets (RONA), excluding Hughes, was 14.0 percent. "RONA performance in 1999 was well above our 12.5-percent target," Smith said. "We are focused on further improving this performance to maintain our financial strength and provide a superior return to our shareholders."
GM's 1999-calendar-year results were driven by strong year-over-year increases at GM North America (GMNA) and GMAC. After adjusting both years for the above-mentioned special items, and excluding the $1.5 billion strike-related unfavorable impact in 1998, GM North America posted a 42-percent improvement in income in 1999 over the prior year. In establishing its new calendar-year-record results, GMAC generated over 16 percent more income in 1999 than during the prior year.
"These strong GMNA and GMAC results and improvements in Latin America reflect our emphasis on reducing structural costs and growing the business. This performance offset reduced earnings and losses in other areas of our business, again demonstrating the advantages of operating as a globally integrated enterprise," Smith said.
GM's fourth-quarter-1999 results primarily reflected lower production and unfavorable mix due to the full-size utility truck startups in North America and lower production in Europe. In addition, all the automotive regions face continuing competitive pressures, while Hughes has incurred further costs associated with the rapid acceleration of its DIRECTV operations.
Following is a summary of income from GM's business segments in the 1999 fourth quarter and calendar year, compared with the prior-year period. These results are adjusted to exclude special items. Calendar-year-1998 results include the previously mentioned unfavorable strike impact. (see "Highlights" for additional information):
Adjusted Fourth Quarter and Calendar Year Income (Loss) ($ in Millions)
Fourth Quarter |
Calendar Year |
|||
1999 |
1998 |
1999 |
1998 |
|
| GM North America | $1,013 |
$1,663 |
$4,565 |
$1,715 |
| GM Europe | $30 |
$146 |
$423 |
$463 |
| GM Latin America/ Africa/Mid-East | $18 |
($161) |
($81) |
($124) |
| GM Asia Pacific | ($23) |
($116) |
($218) |
($146) |
| Other Automotive | $12 |
($5) |
$35 |
($2) |
| Total Automotive | $1,050 |
$1,527 |
$4,724 |
$1,906 |
| GMAC | $367 |
$298 |
$1,543 |
$1,325 |
| Hughes | ($61) |
$119 |
($105) |
$272 |
| Other | ($101) |
($32) |
($476) |
($182) |
| Total Income from Continuing Operations | $1,255 |
$1,912 |
$5,686 |
$3,321 |
GM Automotive's net margin was 2.8 percent in the fourth quarter of 1999, and 3.2 percent for the calendar year, compared with a net margin of 4.1 percent in the fourth quarter of 1998, and 1.5 percent for calendar-year 1998. GM North America's net margin was 3.4 percent in the fourth quarter of 1999, and 4.0 percent for the calendar year, compared with 5.8 percent in the fourth quarter of 1998 and 1.8 percent for the 1998 calendar year.
GM's global automotive operations were strengthened during 1999 with the enhancement and expansion of major partnerships and alliances. "We strengthened our alliances with Isuzu and Suzuki, forged a new partnership with Fuji Heavy Industries, and we recently announced that we will take full ownership of Saab. We also strengthened our collaboration with Toyota, and in December announced joint activities with Honda," Wagoner said.
"While industry sales in Europe were at record levels once again, the competitive environment continued to heat up," Wagoner said. "GM Europe (GME) had record vehicle deliveries of 1,979,000 units in 1999, resulting in a market share of 9.8 percent, an improvement of 0.2 percentage points over 1998. And importantly, GME was profitable in all four quarters of 1999. For 2000, we're accelerating our focus on improving financial performance and growing sales with a strong array of new products," he said.
"Although the Latin America/Africa/Mid-East region continued to be affected by poor economic conditions, we were pleased that we moved into a profitable position in the fourth quarter of 1999, a notable turnaround from the prior-year period," Wagoner said. "Operating efficiencies continued to improve, and we strengthened our position in the region, growing our market share in 1999 by 0.9 percentage points to 16.6 percent."
The Asia-Pacific region significantly reduced its fourth-quarter losses compared with the prior-year period. "This was largely due to the strong startup of our Shanghai GM joint venture in China, and Holden's excellent sales and financial performance in Australia," Wagoner said. "We continue to better position ourselves for future growth in the region through expanded and enhanced strategic partnerships and alliances."
GMAC's improved financial performance in both the fourth quarter of 1999 and the calendar year was led by strong improvements at its core North American automotive-financing operations. For the calendar year, earnings from mortgage operations more than doubled from the previous year.
Hughes Electronics' net sales and revenues increased 25 percent to $7.6 billion in 1999, from $6.1 billion in 1998. "The revenue increase was primarily driven by continued growth in the DIRECTV business, which added a record 1.6 million net new subscribers in 1999," Smith said. "DIRECTV continues to be the world's largest direct-to-home provider of digital entertainment programming with more than 9 million subscribers worldwide."
Hughes' net loss in 1999's fourth quarter and calendar year was primarily related to investments in growth opportunities, which are expected to result in increased revenues and profits in the future.
Hughes last week announced major changes in its corporate structure and business mix that are designed to sharply focus the company's resources and management attention on its high-growth entertainment, information, and business communications services. Actions included the sale of Hughes' satellite systems operations, and a strategy to discontinue certain wireless manufacturing activities and focus on wireless broadband opportunities. (January 20, 2000)
see also: Automotive Intelligence Special NAIAS 2000
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