General Motors Adjusted Loss Is $1.2 Billion

At $2.09 a share, it's much wider than feared.
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Updated from 8:34 a.m. EST

General Motors'

(GM) - Get Report

fourth-quarter results were far worse than analysts feared, with the struggling North American automotive division posting an adjusted loss of $1.5 billion.

The North American loss, which reversed a profit of $449 million a year ago, reflected GM's decision to shift production away from sports utility vehicles, plus the now-customary GM headwinds of higher health care and marketing expenses.

Overall, GM lost $4.8 billion, or $8.45 a share, in the quarter, including charges of $3.6 billion, or $6.36 a share, for items including a benefits restructuring with its union and at

Delphi

. GM last year announced a program to drastically scale back its North American capacity, including up to 30,000 job cuts.

Excluding items, GM lost $1.2 billion, or $2.09 a share, in the fourth quarter of 2005, badly missing the Thomson First Call loss estimate of 16 cents a share. The company earned $726 million, or $1.28 a share, on an adjusted basis last year.

Revenue was $51.2 billion in the most recent quarter, down from $51.4 billion last year.

Worldwide total vehicle sales were 9.2 million in 2005, the second most of any year in the company's history, as overseas strength offset a 3.1% unit decline in North America.

"GM's top priority is to restore our North American operations to profitability and positive cash flow as quickly as possible," it said. "In 2005, we laid out a comprehensive and integrated strategy to address the structural issues that impede our competitiveness and profitability, and we are focused on rapidly executing all aspects of the turnaround plan."

The stock fell $1.05, or 4.4%, to $22.80.

Weakness in GM's automotive operations offset another strong quarter for General Motors Acceptance Corp., which earned $614 million, compared with $683 million year ago.

Outside of the U.S., GM Europe had an adjusted loss of $159 million in the fourth quarter, compared with a loss of $345 million a year ago, while GM Asia Pacific earned an adjusted $112 million, compared with $117 million a year ago.

"2005 was one of the most difficult years in GM's history, driven by poor performance in North America," the company said in a release. "It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue. Our results were also dramatically and adversely affected by charges for restructuring and matters associated with Delphi Corp.'s Chapter 11 filing.

"In order to improve financial results in 2006 and 2007, we are moving quickly to implement several important actions that will address these weaknesses in North America. And, we have a good line of sight on the steps we need to take to further reduce structural costs on a global basis that will position GM for long-term success."