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Business

GM annual losses exceed $30 billion

Latest update : 2009-02-26

US car giant General Motors posted $30.9 billion losses for 2008. The auto-maker said last week it would need government loans of up to 22.6 billion dollars and announced it would slash around 47,000 jobs worldwide.

AFP - General Motors warned of a "challenging" year ahead as it posted a 30.9-billion-dollar 2008 loss Thursday which brought the tally from four consecutive years of bleeding balance sheets to a whopping 86.6 billion dollars.
  
The 2008 results were nonetheless an improvement upon 2007, when GM posted a 43.3 billion dollar loss due primarily to a massive accounting charge, even as annual revenues fell to 149 billion from 180 billion in 2007.
  
The struggling automaker, which last week asked the US government for billions more in emergency loans, said its dismal results reflected the global economic crisis and an industry-wide collapse in demand.
  
"2008 was an extremely difficult year for the US and global auto markets, especially the second half," GM chairman and CEO Rick Wagoner said in a statement.
  
"These conditions created a very challenging environment for GM and other automakers, and led us to take further aggressive and difficult measures to restructure our business," Wagoner said.
  
"We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."
  
General Motors said last week it could need up to another 22.6 billion dollars in government loans in order to survive the current economic downturn and announced plans to slash 47,000 jobs worldwide amid a massive restructuring plan.
  
The automaker asked the US Treasury for an additional 16.6 billion dollars on top of the 13.4 billion received in recent weeks and said it is also asking for funding support from the governments of Canada, Germany, Britain, Sweden, and Thailand.
  
"GM requires this funding in 2009 to continue operations until global automotive sales recover and its restructuring actions generate benefits, resulting in the company being able to fund its own operating requirements," the automaker said Thursday.
  
The Treasury Department has until March 31 to decide whether the massive restructuring plans submitted by GM and Chrysler last week are enough to ensure the long-term viability for the two auto icons.
  
The 53.32-dollar annual loss per share dwarfed the 26.94-dollar loss predicted by analysts.
  
GM's fourth quarter loss of 9.6 billion dollars amounted to 15.71 dollars per share, nearly double the forecasted 7.40-dollar-loss.
  
GM shares were down two percent at 2.50 dollars in morning trade, which is less than a tenth of the value of its 24.58 dollar closing value a year ago.
  
GM said it is working with its auditors to "determine whether there is substantial doubt about GM's ability to continue as a going concern."
  
It plans to postpone filing its results with securities regulators in order to have "more time for thorough review of the extensive financial and other disclosures regarding the events that occurred at year-end 2008 and during early 2009."
  
GM said it managed to slash North American structural costs by three billion dollars last year but its North American operations nonetheless posted a 2008 loss of 14.1 billion dollars.
  
GM's automotive operations burned through 5.2 billion dollars in the fourth quarter and 19.2 billion dollars in 2008. It is forecasting a 14 billion dollar cash burn for 2009.
  
"The revenue decline was predominantly due to the precipitous drop in sales amid record low consumer confidence in the United States and sharply lower sales across all of GM's operating regions due to economic turmoil in the global markets," GM said.
  
GM, which lost its title as the world's largest automaker to Toyota last year, noted that global industry sales in 2008 were down five percent, or 3.6 million vehicles, compared with 2007 levels.
  
Total US industry sales fell by 18 percent, or nearly three million units, to 13.2 million vehicles in the sharpest decline in 29 years.
  
GM said it expects US auto sales to fall even more dramatically to 10.5 million vehicles in 2009.
  
That would be the lowest level on a per capita basis in 50 years and comes after nearly a decade of sales that topped 16 million vehicles a year.

Date created : 2009-02-26

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