By Peter Whoriskey
Washington Post Staff Writer
Thursday, April 8, 2010; A14
General Motors lost $4.3 billion during the second half of 2009, but the automaker could turn a profit this year, the company said Wednesday in its most thorough accounting report since the government rescued it after bankruptcy last year.
The company's financial condition has improved dramatically since it entered bankruptcy proceedings in June and was revived by a $50 billion investment from the U.S. government.
"As the results for 2009 show, there is still significant work to be done," said Chris Liddell, GM's vice chairman and chief financial officer. "However, I continue to believe we have a chance of achieving profitability in 2010."
Executives suggested that the $4.3 billion net loss for the period after GM emerged from bankruptcy in July through the end of 2009 overstates the difficulties facing the company.
The figure includes the impact of a $2.6 billion settlement related to a union retiree medical plan and a $1.3 billion drop due to the impact of foreign exchange rates on the company's liabilities. Excluding one-time charges of that nature, the company lost about $600 million in the fourth quarter, a more modest loss, particularly for a company of its size, Liddell said.
"The underlying profitability is not as bad as it would seem," he said.
By virtue of its intercession last year, the U.S. government owns 61 percent of GM. Whether it can recoup most of its investment depends on the automaker's return to profitability.
Some analysts agreed that the company is poised to turn a profit.
"They should be able to make money," said Maryann Keller, a veteran automotive analyst and author of "Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors," which was published in 1989.
She noted that the company generated $1 billion in cash in the six months after it emerged from bankruptcy protection last July. Also, the company's business overseas, particularly in China, appears to be growing.
"There's good news in China," she said. "The people love Buicks."
While the number of the company's vehicle deliveries in the United States were flat for the fourth quarter of 2009 compared with the same quarter in 2008, they grew 50 percent in GM's international operations.
Even so, GM has not earned an annual profit since 2004 and lost $88 billion between 2005 and its bankruptcy filing in June 2009.
Through the bankruptcy and reorganization, the company shed billions in debt, some of its brands and 26,000 employees worldwide. Now leaner, GM can more easily earn a profit, company officials said.
The company has begun to repay $8.4 billion in government loans from the United States and Canada. But most of the U.S. investment in GM can be recovered only when the government's equity stake is sold.
That sale, Liddell said, will happen only when the company and the market are ready.
Turning a profit is "the most important foundation" to be set before the company's shares are sold to the public, Liddell said.