General Motors said Wednesday it earned 950 million dollars in the fourth quarter, posting its first quarterly profit in two years, as a major cost-cutting effort finally bore fruit.
Even with the profit, the struggling US automaker closed the books with a loss of two billion dollars for 2006 in results that disappointed many analysts.
In a long-delayed earnings report, GM said it made major strides in turning its operations around after a 10.4 billion dollar loss in 2005.
But the loss for 2006 excluding one-time items was wider than expected and a large part of the profit in the October-December period came from special items.
GM chairman and chief executive Rick Wagoner said however that the reorganization allowed the auto giant to show an operating profit of 2.2 billion dollars for 2006, with one-time costs excluded.
"We needed 2006 to be a big year, and it was," Wagoner said in a statement.
"Our performance last year reflects the significant progress we've made toward transforming GM into a more competitive global business focused on long-term, sustainable success."
The Detroit automaker said it reduced structural costs in North America by 6.8 billion dollars in 2006, exceeding its target of six billion, and remains "on track" to deliver the previously announced nine billion dollars of annual cost savings in 2007.
"We made very significant progress in 2006 toward our 25 percent structural cost goal," Wagoner said. "At the same time, we continue to invest heavily in future products, technology and growth markets."
The profit for the fourth quarter excluding one-time items amounted to 180 million dollars, or 32 cents per share, well below Wall Street forecasts.
For all of 2006, the operating profit was 3.88 dollars per share, below the average analyst forecast of 4.39 dollars.
GM said its revenues for the quarter were 51.2 billion dollars, down slightly from the same period a year ago. For the year revenues amounted to a record 207 billion dollars from 195 billion dollars in the prior year.
GM, struggling to hold its crown as the world's biggest automaker amid a surge by Japan's Toyota, reported global sales of 9.1 million vehicles for the year.
The earnings report was delayed by over a month as GM restated its finances as far back as 2002.
GM has been hurt by a shift away from its profitable trucks and sport utility vehicles, and weighed down by hefty pension and medical costs. But it is getting some results from the overhaul of its North American operations, involving plant closings and the elimination of 35,000 jobs.
The loss for GM North America was narrowed in 2006 but with restructuring costs still represented a net drag on earnings of 4.6 billion dollars.
The special items for the last quarter included the sale of GM's desert proving ground property and a 51 percent stake in its finance arm, GMAC.
GMAC had helped GM results through its lean years, but the unit, which has operations in auto finance as well as mortgages, was hurt by woes affecting the US housing market.
GM said it agreed to pay an extra one billion dollars to compensate for the lower value of GMAC's Residential Capital division, a mortgage finance arm with exposure to so-called subprime loans to borrowers with poor credit.
At midday, GM shares were down 1.4 percent at 30.07 as analysts gave a lukewarm response to the earnings.
Himanshu Patel at JP Morgan Securities said the results were "consistent with recent market expectations" and predicted a "neutral" response on Wall Street.
"While GM had a small victory, there is still much work to be done," said Kimberly DuBord at Briefing.com.
"GM said it expects its performance will improve in 2007, but would not predict whether the company would remain profitable throughout the year. Meaning, essentially, the road will remain a bumpy one for GM."