DETROIT — If you're an automaker, especially one from Detroit, conditions probably aren't going to be better for you to make a lot of cash.
For General Motors, that's what happened last year as the company posted a record $9.7 billion net profit.
Yes, a good chunk of that was a $3.9 billion one-time accounting gain due to better prospects in Europe, but the company still made billions on booming sales of its strong lineup of SUVs and trucks, mainly in North America.
Earnings were so strong that most of GM's 49,600 hourly workers will get $11,000 profit-sharing checks on Feb. 26. The checks were based on North American pretax earnings, which hit a record of just over $11 billion for the year.
Yet even with the earnings, GM gets no respect from the stock market. Its shares were down 3.5 percent at midday Wednesday to $28.61. Investors haven't been kind to auto stocks for years. GM shares are down more than 15 percent in the past year, and are more than $4 below the company's initial public offering price of $33 in November of 2010.
The strong performance actually worked against GM, with investors fearing that auto sales have peaked and the U.S. is toward the end of a seven-year positive economic cycle, said Jeff Windau, equities analyst with Edward Jones in St. Louis.
Although GM executives tried to highlight that there's still room for growth, investors are skeptical about what will drive it, he said.
"As you post strong numbers, it raises the question of how much better can it get?" said Windau, who gives GM a "Hold" rating but forecasts modest sales growth.
Excluding special items, GM earned $5.02 per share for the year, beating Wall Street estimates of $4.82. Full-year revenue fell just over 2 percent to $152.4 billion, but still beat analyst estimates of $144.9 billion.
For the fourth quarter, GM posted a profit of $6.3 billion, including the accounting gain in Europe. GM expects to break even there this year and took the gain because prospects for making money are good.
Without special items, the company earned $1.39 per share, beating estimates of $1.20. Fourth-quarter revenue was flat at $39.6 billion, just below Wall Street expectations.
In Europe, GM lost $298 million before taxes, narrowing the loss from last year. International operations including China made $408 million, while the company lost $47 million in South America.
Chief Financial Officer Chuck Stevens said he wasn't worried about the full-year drop in revenue, blaming currency fluctuations for about a $10 billion decline. "Size for size sake is not something that drives us," he said. "Growing profitability is much more important to us than growing revenue."
He argued against the theory that the U.S. economy is poised for a downturn, saying that fundamentals remain strong. Still, GM will maintain a low break-even point, seek cost efficiencies and control inventory levels just in case, he said. "We believe we are well-positioned for the downturn," Stevens said. "We just don't think it's going to happen anytime soon."
The stock drop came even though GM has increased its dividend and raised its stock buyback program to $9 billion. During the year it returned $5.7 billion to shareholders including $3.5 billion in stock buybacks and $2.2 billion worth of dividend payments.
Stevens said the market should respond if the company keeps meeting commitments and following its plan.
"We're confident that if we execute the plan and continue to build that track record, we'll drive shareholder value and it will be reflected in the share price," he said.