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Last Updated: Friday, 17 March 2006, 06:27 GMT
Pension costs push GM loss higher
GM chief executive Rick Wagoner
GM boss Rick Wagoner is under huge pressure
GM, the world's largest carmaker, made a $2bn (1.1bn) higher loss last year than previously indicated.

GM said it had revised upwards its 2005 loss to $10.6bn due to higher costs relating to the restructuring of its business and staff pension liabilities.

The move is a fresh blow to the firm which has suffered heavy losses and falling sales, particularly in the US.

GM is cutting 30,000 jobs over the next three years as it tries to make its business more competitive.

Delphi costs

In a statement after the stock market closed, GM said it would also delay filing its annual report by two weeks after discovering accounting errors at a subsidiary business.

The additional losses partly stem from GM's huge restructuring program, which will result in the closure of several factories.

Costs relating to plant closures and employee redundancies have risen by $300m to $1.7bn.

GM's financial exposure to the car parts supplier Delphi, which sought bankruptcy protection last year, have also risen significantly.

As Delphi's former owner and still a significant shareholder, GM is liable to pay the pension and healthcare costs of its workers.

GM revised upwards Delphi-related costs from $3.6bn to $5.5bn and warned its liabilities could potentially be as large as $12bn.

GM has been struggling to reverse a trend of poor sales and falling market share in its home market.

'Not a disaster'

Some analysts have been encouraged that management, led by chief executive Rick Wagoner, were prepared to make hard decisions about GM's future operations.

However, a recent report by credit rating firm Standard and Poor's said that "time was short" for GM to stave off bankruptcy.

"It is not the end of the world," David Healy, an analyst at Burnham Securities, said about the latest development.

"The accounting charges seem to be mostly timing, instead of earning in one period they have to state them in another period."


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