General Motors (GM), the world's largest car maker by sales, returned to profit in the fourth quarter of 2006.

The US firm reported a net income of $950m for the last three months of 2006, compared with a loss of $6.6bn a year ago. Fourth-quarter sales slipped $0.5bn to $51.2bn.

GM made a loss of $2bn for the whole of 2006. The car maker said it lost $10.4bn in 2005.

The company has benefited from cost-cutting and much improved revenues at its auto business.

However, the results failed to meet Wall Street expectations and as a result caused its share price to slip 28 cents to $30.21 in morning trading on the New York Stock Exchange.

Rick Wagoner, GM: "We needed 2006 to be a big year, and it was."

But GM president Rick Wagoner remained upbeat. "We needed 2006 to be a big year, and it was," he said.

"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.

"But nobody at GM is declaring victory, because we all know there is still a lot more work to do to achieve our goals of steady growth, solid profitability and positive cash flow generation."

GM, which owns brands such as Saab, GMC and Saturn, sold 9.1 million vehicles worldwide in 2006, including 5 million outside of the US.

The firm also closed 12 factories and cut more than 34,000 jobs during 2006.

Looking ahead, GM said it was confident that the momentum it generated in 2006 would continue over the next twelve months.