General Motors earned $1.1 billion in the fourth quarter, a 21 percent improvement from a year earlier, and its United Automobile Workers employees will receive profit-sharing of up to $9,000 based on the company’s full-year pre-tax profit in North America of $6.6 billion.
The $9,000 payment is not an average, but the maximum the company’s 48,400 hourly UAW workers who logged 1,850 hours during 2014 will receive. The payments, which are scheduled to be made Feb. 27, are higher than last year’s maximum of $7,500, and the most since GM and the UAW negotiated to share a portion of the company’s domestic profit.
“UAW members at General Motors are proud of what they do and see profit-sharing as another validation of their hard work producing quality vehicles,” said Cindy Estrada, Vice President for the UAW’s General Motors department. “Profit-sharing does more than put a few dollars into a member’s pocket. It means more to spend in the community.”
The automaker’s $2.8 billion, or $1.07 per share, in recall costs affected profit-sharing, but were partially offset by the achievement of certain productivity and quality goals in UAW plants.
“There was not set formula (for profit-sharing),” said Chief Financial Officer Chuck Stevens. “The most important aspect was to reflect the significant support and hard work of our team.”
For all of 2014, GM’s global earnings fell 30 percent to $2.8 billion, reflecting recall costs and a larger loss in Europe of $1.4 billion (compared with an $869 million loss in 2013), and a loss of $180 million in South America.
“A strong fourth-quarter helped us deliver very good core operating results in 2014 despite significant challenges we and the industry faced,” CEO Mary Barra said in a statement.
The fourth-quarter results of $1.19 per share easily beat the consensus of Wall Street analysts, who were expecting GM to earn 83 cents per share. GM’s board of directors will vote at its next meeting to raise the quarterly dividend from 30 to 36 cents a share. The increase would be paid out beginning in the second quarter of 2015.
In trading Wednesday, GM shares rose 5.4 percent to $35.83.
The automaker’s global sales, including its GM Financial lending arm, totaled $155.9 billion, up 0.3 percent from 2013.
In North America, a recovering economy and GM’s new pickup trucks and large SUVs helped the company earn a profit margin of 8.9 percent for 2014, up from 7.8 percent in 2013. But the profit was reduced by $2.8 billion in costs related to the recall of about 30 million vehicles in the U.S. That reduced the North American margin to 6.5 percent.
In addition, GM has estimated that a special compensation fund established for victims of crashes caused by a defective ignition switch could cost between $400 million and $600 million.
Ken Feinberg, the administrator of that fund, said earlier this week that a Jan. 31 deadline for filing claims for fatalities and deaths will not be extended. More than 1,100 claims are under review and the total cost won’t be known until later this year.
Stevens reiterated guidance he gave to investors last month that GM’s global earnings will grow this year, largely on the continued strength of its North American and Chinese businesses.
GM even expects to be profitable in Europe by 2016, despite the weakening Russian economy. It will halt production at its St. Petersburg assembly plant from mid-March through mid-May.