Ford beats profit forecasts despite $1.75bn loss in Europe

Tuesday 29 January 2013 15.14
Ford anticipates a losses in Europe to grow this year
Ford anticipates a losses in Europe to grow this year

Ford earned better-than-expected profits in 2012 as record results in North America trumped losses in Europe.

However it will have to do even better in the American market this year as the losses in Europe mount.

The number two automaker earned $5.7 billion (€4.22bn) for the year, or $1.42 (€1.05) per share. That was down by $300 million (€222.4m), or $1.51 (€1.12) per share, in 2011, as a $1.75bn (€1.3bn) loss in Europe took its toll.

However Ford reported a record pretax profit of $8.3bn (€6.15bn) in North America, where sales rose and Ford made more money on every vehicle it sold.

The company is planning to give out record profit-sharing bonuses of $8,300 (€6,152) to 45,800 workers based on its North American results.

Chief Financial Officer Bob Shanks said Ford expects even higher results for North America this year, as demand for Ford's pickups and its newest products will likely grow.

However Mr Shanks said Ford now expects to lose $2bn (€1.48bn) in Europe, up from the $1.5bn (€1.1bn) loss it predicted a few months ago.

"Europe will hit bottom this year," Mr Shanks said. He said the company is on track with a plan to close plants and introduce new vehicles in the region. Ford's sales fell by 15.5% in Europe last year.

Worldwide, Ford's sales rose 7.5% to 1.5m in 2012.

The company saw some of its biggest gains in Asia, where it is introducing a slew of new products and building seven new plants. Sales in Ford's Asia Pacific and Africa region were up 41% over 2011.

For the fourth quarter, Ford said its pretax results were the best in a decade.

The company earned $1.6bn (€1.2bn) in the final three months of 2012 as sales rose in every region outside Europe.

Ford's net income fell from $13.6bn (€10.1bn) in the same quarter last year, but that figure included a big accounting-related gain.

Without that gain, Ford's earnings were up from $1bn (€741m) in the fourth quarter of last year.

Ford earned 31c per share, up from an adjusted 20c per share in the fourth quarter of 2011. That beat analysts' forecast of 25c per share, according to FactSet.

Fourth-quarter revenue rose 5% to $36.bn (€27bn), beating analysts' forecast of $33.5bn (€24.8bn).

In North America, Ford's pretax profit more than doubled in the fourth quarter to $1.87bn (€1.38bn).

Sales of cars and trucks in the US totalled 14.5bn in 2012 - the industry's best performance in five years.

Forecasts are for an even better 2013, with the Polk auto research firm forecasting 15.3m vehicle sales as the economy continues to improve.

Ford lost some US market share in 2012 as its Japanese rivals roared back from earthquake-related losses the prior year. However Ford expects its share to grow in 2013.

Shares fell 23 cents to $13.55 in premarket trading.