Brent Snavely

Detroit Free Press

General Motors' net income fell slightly in 2016 but the automaker set a number of financial records during the year, earning more than $12 billion in pretax profits in North America, which translates into record profit-sharing payments of up to $12,000 for UAW-represented workers.

"By nearly every measure, 2016 was a great year," GM CEO Mary Barra said. "This underscores the progress we are making in strengthening our brands and putting our customers first in everything we do."

After taxes, the automaker earned a global net income of $9.43 billion in 2016, a 2.6% decline from the $9.68 billion it earned in the prior year.

Related:

GM sees 2017 profit rising, boosts stock buyback by $5B

The automaker beat analysts' expectations with record earnings of $6.12 per share for the year, a 22% increase over 2015. For the fourth quarter, GM reported a profit of $1.28 per share.

Analysts, on average, expected GM to earn $6.01 per share for the year and $1.17 per share for the three months ending Dec. 31.

Despite setting a variety of financial records, GM's stock fell $1.73, or 4.7%, to close at $35.10 on Tuesday.

Inventory concerns

That's because Wall Street is more focused on how GM will perform this year. Analysts are concerned about the automaker's inventory as car sales decline and the company's ability to meet its 2017 targets as automakers confront the rising cost of developing self-driving cars.

"Investor focus going forward will center around GM’s ability to meet its 2017 guidance of (earnings per share) of $6.00-$6.50 (per share)," Barclays analyst Brian Johnson said in a report. "Investors, and ourselves, have been somewhat skeptical of this guidance."

GM Chief Financial Officer Chuck Stevens said, "We expect to see another strong year in 2017. We're comfortable with the guidance we have in 2017 and we are going to get after it."

GM said last week it will idle production of its Chevrolet Cruze in Lordstown, Ohio, for several weeks this year and at two plants in Lansing as car sales decline. GM ended a third shift at those plants last year.

Stevens said GM finished 2016 with a 71-day supply of cars and trucks, which is considered slightly above what the industry views as healthy. He said GM's inventory will increase during the first few months of this year as the company prepares to launch several new SUVs.

"We will continue to be very disciplined on aligning supply and demand," Stevens said.

Fourth-quarter profits fall

The automaker also said its global revenue topped $166.38 billion in 2016 compared with $152.36 billion last year as demand for its full-size trucks and SUVs increased, especially in North America.

But GM's fourth-quarter net income fell 70% to $1.8 billion because of a one-time charge of $100 million related to legal costs tied to recalls and a $300-million loss due to unfavorable foreign exchange rates.

The company also faced an unfavorable comparison to the fourth quarter of 2015 when GM realized a benefit of $4 billion related to gains associated with its European tax assets.

In China, where GM is the largest automaker by volume, retail sales increased by 33,000 last year, mostly for its Baojun, Buick and Cadillac brands.

However, total sales in the region fell slightly to 559,000 new vehicles from 588,000 the prior year.

GM's pretax profit in Asia fell to $1.1 billion in 2016 from $1.4 billion the prior year.

In Europe, GM reported a pretax loss of $257 million compared with a loss of $813 million before.

Record profit sharing

In North America, GM earned a record $12 billion, compared with $11 billion last year, leading to the largest profit-sharing payment to U.S. workers in GM's history.

The automaker's profit sharing, which will be paid to 52,000 UAW-represented workers on Feb. 24, is part of a 2011 contract that updated the profit-sharing formula. The maximum pretax worker payout of $12,000 is not an average, but the maximum the company's workers who logged 1,850 hours will receive.

UAW workers receive about $1,000 in profit sharing for every $1 billion in profit. It's a formula that has worked out well for workers in recent years and could cost the company as much as $624 million this year.

“Today’s performance bonus announcement of a maximum of $12,000 each rewards our members' dedication and commitment to building some of the most popular and high-quality vehicles in the world," said UAW Vice President Cindy Estrada. "They deserve every penny of that collectively bargained bonus check."

GM workers received a maximum pretax profit payment of $11,000 last year and $9,000 in 2015. Workers received zero money in profit sharing from 2005-09 when the automaker was struggling.

Will autoworkers save or spend bonus checks?

At other automakers

Ford said last month its UAW-represented workers will receive $9,000 on average in profit-sharing checks before taxes thanks to a near-record profit for the automaker. The size of the check is expected to be the second-largest in the history of the Dearborn automaker. The Ford UAW workers will receive the money March 9.

Fiat Chrysler Automobiles said last month that UAW-represented workers will receive, on average, a $5,000 profit sharing check for 2016, or about $1,000 more than they did last year. The automaker's 38,200 hourly workers and about 2,000 salaried workers represented by the union will receive their checks on Feb. 17.

Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. Follow him on Twitter @BrentSnavely.