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GM shares rise after better-than-expected fourth quarter profit

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Shares in North American car giant General Motors have risen after fourth-quarter earnings that exceeded analysts' expectations.

Shares in the firm rose more than 5% to $35.83 per share after GM announced quarterly profits of $1.1bn (£720m).

GM said it intends to increase its dividend in the second quarter by 20%, to 36 cents, if its board approves.

Strong sales of sports utility vehicles and trucks helped boost fourth-quarter earnings.

"A strong fourth quarter helped us deliver very good core operating results in 2014, despite significant challenges we and the industry faced," said GM chief executive Mary Barra.

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Chief financial officer Chuck Stevens said profitability would improve in all geographic markets in 2015 and that the company was "very much on the path to 10% margins [in North America] in 2016".

Mr Stevens said the company was still predicting a pre-tax profit in Europe in 2016.

Recall impact

Over the year, GM saw a net income of $2.8bn, despite recall costs of $2.8bn.

The company saw multiple car recalls in 2014, including more than 220,000 cars recalled in September over a brake defect.

The firm set $400m aside for the year for legal claims.

North American profit margins for 2014 were 6.5%. Excluding the additional costs for the record vehicle recall, they would have been 8.9%, GM said.

Without the recall costs, 2014 operating profit of $6.5bn would have been $2.8bn higher.

Yearly earnings were not strong in every geographic region. GM's annual loss in Europe widened by almost 60% to $1.37bn, from $900m in 2013, which the firm put down to economic problems in Russia.

Earnings from international operations, including Asia, fell 3% for the year to $1.2bn.

GM in South America reported a full-year loss of $180m, compared with a $327m profit in 2013.

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