General Motors Co announced on Wednesday a fourth quarter profit well above estimates as lower gasoline prices boosted high-margin vehicle sales, which offset the impact of recalls.
Adjusted earnings per share came in at $1.19 for the three months ended December compared to the $0.67 per-share earnings the company reported a year ago. Analysts polled by Thomson Reuters had projected earnings per share of $0.83.
Net income for the quarter stood at $1.1 billion, or $0.66 a share, compared year-over-year with a profit of $900 million, or $0.57 a share.
Detroit-based GM said full-year profit margins in its North American operations were 6.5%, despite the recalls the company initiated. In 2014 the largest car manufacturer in the US called back at least 30 million vehicles in North America, in relation to a faulty ignition switch which has caused 51 deaths to date.
In the US, GM recalled a record 26.9 million vehicles, excluding the costs of the call backs North American profit margin would have stood at 8.9%.
In line with the strong performance GM decided to lift its dividend by 20% to $0.36 starting in the second quarter, answering shareholders call for higher returns. The increase will drive GMs annual dividend-related expenses to $2.4 billion.
GM Chief Financial Officer and Executive Vice-President Chuck Stevens said that there might be more shareholders returns later in 2015, but the company has to deal with the fallout of the recalls first.
Later this month the company would award 48 400 full-time UAW union workers with a bonus of up to $9 000, based on the companys 2014 performance.
Revenue for the quarter fell to $39.6 billion, compared to last years result of $40.5 billion.
Operating profit from the companys North American operations climbed to $2.21 billion from $1.88 billion, boosted by higher demand for GMs new cars and trucks.
Meanwhile, Europe reported another loss of $393 million in the quarter, worse compared to the $363 million it stated a year ago. European operations were also responsible for a $1.37 billion reduction in full-year operating profit, which landed at $7.08 billion, down from $9.07 billion year-on-year.
“In 2015, we’ll continue to focus on driving further improvements to keep us on a glide path to achieve our near-term and long-term objectives,” said Mr. Stevens.
GM gained 2.63% on Tuesday and closed at $33.98 in New York, marking a one-year decrease of 3.6%. The company is valued at $54.60 billion. The stock climbed 3.83% to $35.28 at 14:15 GMT on Wednesday during pre-market trading.
According to the Financial Times, the 16 analysts offering 12-month price targets for GM have a median target of $39.50, with a high estimate of $51.00 and a low estimate of $28.00. The median estimate represents a 16.24% increase from the last closing price.
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