Ford posts higher profit but faces pressure in US

Tuesday 28 January 2014 15.48
Ford CEO Alan Mulally confirms 2014 profit outlook
Ford CEO Alan Mulally confirms 2014 profit outlook

Ford Motor today posted a higher than expected quarterly profit as a strong performance in its core North American market offset losses in Europe and South America.

The company also affirmed the 2014 profit outlook that it presented to investors last month.

Ford has described 2014 as a transition year that will test the strength of chief executive Alan Mulally's team and the company's restructuring since he took over in 2006.

Ford said last month that the cost of introducing new vehicles and a deteriorating Venezuelan economy would dent its profit this year.

The news sent the company's shares to their biggest one-day percentage drop in more than two years.  However, the stock regained ground after Mulally quashed speculation earlier this month that he would leave Ford for the top job at Microsoft.

He has emphasised that he remains engaged in the company's day-to-day operations as well as setting long-term strategy. 

Ford said its net income in the fourth quarter rose to $3 billion, or 74 cents a share, compared with almost $1.6 billion, or 40 cents a share, a year earlier.

The results included a $2.1 billion gain from the addition of deferred tax assets to the balance sheet, as well as charges of $311m for last year's pension buyouts and layoffs in Europe.

Quarterly revenues rose 4% to $37.6 billion, above analysts' estimates of $35.17 billion.

In North America, Ford's pretax earnings were $1.7 billion, a decline of $200m, as vehicle pricing fell. However, the profit was higher than analyst expectations.

The company reported a wider than expected loss of $126m for South America, compared with a year-earlier profit. Its $571m loss in Europe, though smaller than the previous year, was still wider than analysts had expected. Earnings in Asia Pacific Africa surged more than 170% to $106m.

For all of 2013, Ford's net profit was $7.2 billion, including charges of $1.6 billion and favourable items of $2.2 billion. The pretax profit of $8.57 billion was the second-highest in the last decade, trailing only 2011's $8.76 billion.

Ford said today it still expected a global profit this year of between $7 billion and $8 billion, with lower car operating margins.

The company has said 2014 will be the busiest launch year in its 111-year history, including the critical introduction of the redesigned F-150 full-size pickup truck in the autumn.

F-150 production will be down for a total of 13 weeks in 2014, 11 weeks at Ford's truck plant in Dearborn and two weeks at its Kansas City, Missouri, plant, to prepare for the new version.

Ford has reduced the weight of the new truck by using more aluminum than in the current models. The F-150 is the best-selling pickup in North America and is a large profit maker for Ford.

Ford also said that because of its 2013 earnings, it would make record profit-sharing payments of about $8,800 per person to about 47,000 US hourly employees.