General Motors on Tuesday reported a sharp decline in fourth-quarter profit and predicted flat profit growth for 2017.
Net income for the last quarter dropped 70.7% to $1.8 billion, reflecting in part special items and a $500 million negative foreign currency impact. Profit in the year-ago quarter was inflated by a tax-related gain from special items of $4.0 billion.
Adjusted earnings of $1.19 per share beat analysts’ expectations by two cents. For the year as a whole, GM earned a record $6.00 per share while sales rose 9.2% to a record $166.4 billion.
“By almost any measure, 2016 was a great year for our business and I am confident we can achieve even stronger results,” CEO Mary Barra said in a news release. “We’ll work to build on our momentum, while continuing to drive our company to innovate and shape the future of mobility.”
About $300 million of the foreign currency hit to fourth-quarter net income came from the decline in the value of the British pound after the vote to leave the European Union, GM said.
But for 2017, GM is expecting earnings of $6.00-$6.50 per share. In trading Tuesday, the automaker’s shares fell 4.7% to $35.10.
“The latest results from GM, the third-largest global automaker, highlighted the challenges facing auto industry chiefs as an era of open trade and low interest rates that fed growth appeared to be ending,” Reuters said.
GM has invested in new technology, such as automated vehicles, and new sport utility vehicles and trucks, but according to Reuters, analysts believe the company is unlikely to deliver significant growth in 2017 after two years of record profits.
GM’s U.S. sales fell 1.3% last year to 3.04 million vehicles, while inventories of unsold vehicles at its U.S. dealers rose by one-third to 845,000 vehicles at the end of 2016.
But the company gained 0.5 percentage points of U.S. retail market share in 2016 and CFO Chuck Stevens said it had built up inventories ahead of product launches, and intends to bring them down through this year.