General Motors reported lower fourth-quarter earnings yesterday, dragged down by the company's perennial problems: wider losses in Europe and rapidly rising healthcare costs in the United States.
The world's largest carmaker said profits fell to $630m (£337m), down from $1bn a year earlier. Excluding one-off items, the latest earnings were even lower, at $569m.
The company warned that it might do no better than break even in the current quarter.
GM's struggling European carmaking business reported a loss of $345m, worse than the $66m in the same quarter a year ago. For the full year, the European operation slumped to losses of $742m, compared with a deficit of $286m in 2003.
Late last year, GM announced plans to cut 12,000 jobs in Europe - about a fifth of its workforce there - as it struggles to move the division into profit. The cuts, which will result in a $1bn charge, will largely be focused on Germany, expected to account for 10,000 of the job losses.
The European division has made losses for six years running. The company is planning to move its British Vauxhall and German Opel brands upmarket. GM is considering scrapping the Saab brand.
The chairman and chief executive, Rick Wagoner, said the agreement with European trade unions had been a "milestone". "But we're also focused on improving revenue. In 2004, GM Europe increased its market share to 9.5%, its highest level in five years." Global market share was 14.5%.
Last week, GM warned that it would post weaker earnings this year. The company said it expects its healthcare bill to grow by more than 10% over the next 12 months, adding a further $1bn to its annual costs. The carmaker warned that itsaw no political solution to the problem, one of the most important issues facing large employers in the US.
For the full year, GM re ported earnings of $3.7bn, down from $3.8bn in 2003. The highest growth was in financial services, which posted a record profit of $2.9bn.
Mr Wagoner described the performance as solid "despite challenging competitive conditions in many markets".
