Record US result drives Ford to $US8 billion profit
BY MIKE COSTELLO | 30th Jan 2013
A strong final three months of the year brought the company home with a wet sail, with a fourth quarter pre-tax profit of $US1.7 billion ($A1.6 billion) its highest in more than a decade.
The full-year figure was down on the $US8.8 billion profit recorded in 2011, but nevertheless marks fourteen straight quarters in the black for the Detroit-based car-maker.
Again, its US domestic market was responsible for the lion’s share of earnings, with record pre-tax profits of $US8.3 billion and an operating margin of 10.4 per cent reflecting the continued recovery of the US market as a whole post Global Financial Crisis.
The company predicts even stronger US pre-tax profits in 2013, citing efforts to slim down its cost structure, better match production with demand and its industry leading roll-out of new-generation model lines.
However, the results were overshadowed by a worse than expected full-year pre-tax loss of $US1.75 billion in Europe, compared to a loss of $US27 million a year earlier.
Ford of Europe’s fourth quarter pre-tax operating loss of $732 million widened sharply from a loss of $190 million in 2011.
The European arm experienced substantial decline in both volume (1.35 million, down from 1.6 million in 2011) and annual revenue (down to $US26.6 billion from $US33.8 billion one year earlier).
These figures were compounded by the forecast of a further $US2 billion in losses for 2013 as the company faces up to an “uncertain” business environment and another volume contraction. Ford said it now expects total European sales volumes to be lower than the 14 million units sold in 2012.
As reported last October, Ford intends to close its assembly plants in Genk, Belgium, and Southampton, England, as well its stamping and tooling operations in Dagenham, east of London, by the end of 2014, in a move that would cost at least 6200 jobs.
The company also reported substantially lower profits of $US213 million in South America – down from $861 million in 2011 – with the launch of several new model lines offset by higher costs and unfavourable exchange rates with Brazil, the region’s biggest market.
Both sales volumes (498,000 units compared to 506,000 in 2011) and revenues ($US10.1 billion, compared to $US11 billion a year earlier) were down on the previous annual figures.
A 41 per cent increase in sales and a $US39 million profit in the fourth quarter were not enough to drag Ford’s Asia, Pacific and Africa division (which includes Australia) out of the red, although its full-year pre-tax loss of $US77 million compared favourably the the $US92 million loss in 2011.
Despite the loss, Ford said its APA division sold more than 1 million vehicles (1.03 million) for the first time in 2012 – up from 901 million units in 2011 – and recorded a record-breaking $US10 billion in revenue (up from $8.4 billion).
Ford has a rosier outlook for the region in 2013, predicting continued growth in volume and revenue to help it break even.
The launch of new models such as the Kuga, EcoSport and updated Fiesta across the region – as well as the Mondeo and Explorer in China – will be offset by “continued strong investment” across the region to support its longer-range growth plans.
Meanwhile, Ford Motor Credit Company – the Blue Oval’s financial services division – recorded a pre-tax profit of $US1.7 billion, down $700 million on the previous year, partially down to lower financing margins.
Ford president and CEO Alan Mulally said the positive growth showed the company’s One Ford plan, highlighted by greater model sharing between diverse markets, was working.
“We are well positioned for another strong year in 2013, as we continue our plan to serve customers in all markets around the world with a full family of vehicles – small, medium and large cars, utilities and trucks – with the very best quality, fuel efficiency, safety, smart design and value,” he said.
As part of the United Auto Workers-Ford collective bargaining agreement, Ford says it will make profit sharing payments of approximately $8,300 to 45,800 eligible US hourly employees on March 14 this year.
