Ford Says Overseas Losses Will Triple in 2nd Quarter
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Thread: Ford Says Overseas Losses Will Triple in 2nd Quarter

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    Ford Says Overseas Losses Will Triple in 2nd Quarter

    By BILL VLASIC
    Published: June 28, 2012
    NY Times

    DEARBORN, Mich. — The Ford Motor Company’s chief financial officer said Thursday that the automaker’s international losses would triple in the second quarter, primarily because of much weaker European sales. The executive, Robert Shanks, also disclosed that Ford would consider closing an assembly plant in Europe should demand keep falling.

    Ford lost $190 million in the first quarter in its international operations, with Europe accounting for nearly 80 percent of the total. Since then, the market has grown worse, and Ford losses are mounting.

    “We lost $190 million in the first quarter, and it will be three times greater than that in the second quarter,” Mr. Shanks said in an interview on Thursday at Ford’s headquarters.

    A loss on international operations of $500 million to $600 million in the quarter, which ends Saturday, will depress Ford’s overall earnings for the period. Previously, the company had forecast that international losses for the second quarter would be roughly the same as the first quarter.

    “We have good results in North America and solid results at Ford Credit, but international losses will be triple,” he said. “The overall company profits will be substantially lower.”

    Up until now, Ford has suffered less from the downward spiral in European vehicle sales than its Detroit rival, General Motors, which is planning to close at least one assembly plant on the Continent.

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    since imho Fomoco is Very conservative with their Announcements nowadays
    so
    I taking this to mean that EuroLosses™ will be THRUtheROOF.

    Saw some posts elsewhere about GMinEurope...
    which imho is a very different situation...
    I expect...
    a good number of companies** across the Pond to crash-if-not-burn



    ** is a Country "too big to fail"???

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    Ford positioning for long-term recovery in Europe - DetroitNews
    July 6, 2012 at 8:17 am
    Neil Winton

    ...Last month Ford shocked investors with a warning that profits would take a big hit because its international business was struggling. Investment banker Morgan Stanley reckoned that Ford Europe was the main culprit, estimating that its losses would more than double in 2012 to well over $1 billion.

    "Ford's new guidance implies what we estimate to be at least a doubling of full year European pre-tax losses to over $1.1 billion. We now expect Ford Europe losses to exceed those of GM's Opel," Morgan Stanley said in a report.

    "Ford knows it cannot let its European excess capacity fester — something has to be done," the report said.

    Earlier this year Morgan Stanley predicted that Opel-Vauxhall losses might reach $1.5 billion in 2012.

    Previously, Ford had said European losses would probably reach $500 million to $600 million as the crisis surrounding the European Union's currency, the euro, sapped consumer confidence and weakened the economy. This has undermined the new car market and forced the mass car manufacturers into a vicious cycle of incentives and price cutting to move the metal. Profit margins have been wiped out and losses have been mounting at Peugeot-Citroen and Renault of France, Fiat of Italy, and at the American transplants GM Europe and Ford Europe.

    Germany's Volkswagen, Europe's top-selling vehicle maker, is believed to have retained its profitability in Europe, while its luxury subsidiary Audi continues to make big money in China and other emerging markets, along with its up-market compatriots BMW and Mercedes...
    <eye candy break>
    </eye candy break>
    ..."Ford and GM at least have the consolation (unlike those in France) that the money they are losing in Europe is balanced by money made elsewhere. It must also be deeply mortifying for Ford and GM to be undermined by uncontrolled losses in Europe," (Professor Karel Williams of the Manchester Business School)

    But for all the apparent woes at Ford Europe, experts like Ian Fletcher, analyst with IHS Automotive, feel it is on the right long-term track, and doesn't have much of an excess capacity problem.

    "Things don't look great for Ford in terms of capacity utilization, but it is going through a transitional stage," said Fletcher.

    Morgan Stanley had said Ford's factory capacity use stood at 63 percent in 2012, lower than all its competitors except Fiat at 57 percent and worse than GM's 66 percent.

    Fletcher said Ford Europe is reorganizing its production. It will also benefit from some new models.

    "Ford is in the process of raising its capacity utilization and putting similar sized vehicles in the same plants, and cutting down inefficient supply chains. All these new models (including the C-Max) will inject some new vigor into sales. Looking at the numbers, 2012 will be Ford's lowest ebb in the region with production likely around one million. But we expect to see this start growing next year toward 1.3 million by 2014," Fletcher said...

    Temporary layoffs
    Fletcher said Ford's increased production will be of higher profit-margin vehicles. He didn't think Ford would need to close plants, but might have to lay off workers temporarily.

    Compared with GM Europe, which has announced probable plant closures, Ford was ahead of the game.

    "GM has a lot of work to do, and it will take two or three years for it to pan out the way it wants to. GM is behind Ford, probably there's a couple of years difference between them at the moment. Ford is probably better organized, but both are bringing out interesting new models," Fletcher said...

    ...Professor Williams of Manchester University put it this way.

    "Europeans have got themselves into an awful mess through a halfway house of integration. To make a go of it, the European car business needs a degree of solidarity, but there's no political agreement about what to do. This is a halfway house of a common currency without relevant banking and fiscal arrangements necessary to make it work. The car industry has an insoluble problem with the worst of all worlds," Williams said.

    More... Yes, there's MORE
    Last edited by 2b2; 07-06-2012 at 12:55 PM.

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    If this is happening at Ford, I am sure they are manufacturing the red ink at Opel. GM is very lucky they do not have Saab to worry about

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    thought I'd add this...
    Discount wars erupt across Europe as sales sag - Reuters/AutoNews
    Opel, Fiat, Renault, Seat, Peugeot among mass-market brands squeezed

    Jennifer Clark
    Reuters -- July 20, 2012


    MILAN -- Free road tax, cheap fuel, cash rebates and even a free car.

    These are only some of the knock-down offers European automakers are offering in a brutal price war to try to lure the few consumers still buying cars in a deepening five-year sales slump.

    "We're not selling a car at a discount. We're selling a discount with a car attached," said Claudio Stucchi, a sales consultant at Milan Honda dealer Mi Auto.

    He is selling new CR-V SUVs for 22,900 euros ($28,000). That's 7,000 euros off the sticker price -- Honda's most aggressive offer ever in Italy.

    Then there's the 20 percent discount on new parts, plus a free rubber ball thrown in for the kids of anyone who walks through the door for a test drive.

    "If there's no discount, the cars don't move," the forlorn car dealer said, shaking his head with a wry smile.

    The bargains underline the pressure in the mass market, where car makers are trapped between slow sales in a moribund economy and offering discounts that gnaw away at painfully small margins.

    Ford's mounting losses
    Ford has already warned investors it will lose about $570 million in Europe in the second quarter, compared to a first-quarter loss of $190 million.

    Ford's western European sales slumped 10 percent in the first half of 2012 as it opted not to match heavy discounting by rivals. But the sales decline hit 16.1 percent in June, year-on-year, in Ford's traditional 19 western European markets.

    Peugeot last week said it would close a factory and cut 8,000 jobs to stop cash burn.

    GM's European arm Opel, meanwhile, is overhauling management to speed its restructuring and cut losses of $3.5 billion over the past three years.

    Peugeot and Opel are the biggest discounters in Germany, France and Britain, according to a Barclays report that downgraded the European auto industry on July 13, showing the direct and deadly correlation between discounting and losses.

    In Britain, Peugeot offers three years' free insurance, tax, servicing, roadside assistance and warranty for anybody buying a new car.

    'Bloodbath'
    In France...

    Read more: http://www.autonews.com/article/2012...#ixzz21VRLtNRT

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    Ford needs to get the Ka out of the Polish Fiat plant so it can use the plant up at one of its own plants.
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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    I think the story is a bit more alarmist than actual reality, Ford in fact seems to be dealing with their European excess production capacity better than most any other manufacturer. As suggested by Ausrutherford above Ka will indeed be moving back to a Ford facility for the upcoming, next generation model and, perhaps more importantly, will be moving back to a more innovative design as well. The current Ka is arguably a bit of a snoozer compared to the spunkier and funkier model it replaced and the very promising Start concept should mean drastically increased sales for the little Ford.

    Look for the new Ford EcoSport to eventually make an appearance in Europe as well supplementing the new Ford B-Max as a replacement for the recently defunct European Fusion mpv. Such an eventuality may not guarantee European production for that model, but I certainly wouldn't bet against it. I would also look for an uptick in sales of the Ford Mondeo (Fusion) as the new model hits the market. Ultimately, I would look for one assembly facility to potentially close barring a significant short term recovery, but one facility is nothing compared to the scenario the article hints at.
    Last edited by syr74; 07-24-2012 at 12:36 PM.

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    ^ I dunno, Syr (btw Welcome!!!)
    kinda think the Euro-situation could wreck the world almost as much as an Extinction-Asteroid

    otoh, it's a GREAT time if you have clinical paranoia!

    Ford reports 58% drop in Q2 earnings - DetroitNews
    July 25, 2012
    By Karl Henkel


    Ford Motor Co. on Wednesday upped its European loss projections, nearly doubling previously expected losses to $1 billion for 2012 amid continued concerns about the region's sovereign debt crisis and high unemployment, which have dealt a blow to consumer confidence and automobile sales...

    ..Investor speculation regarding Europe had taken a toll on Ford's stock price, which this week reached a 52-week low of $8.95 per share. It closed Tuesday at $9.06. The stock was up 1.8 percent in early trading, but dipped below $9 a share after the opening bell...

    From The Detroit News: http://www.detroitnews.com/article/2...#ixzz21fOf2qzM

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    Quote Originally Posted by 2b2 View Post
    ^ I dunno, Syr (btw Welcome!!!)
    kinda think the Euro-situation could wreck the world almost as much as an Extinction-Asteroid

    otoh, it's a GREAT time if you have clinical paranoia!
    It could indeed get very interesting before it gets better. That said, given what I've seen, I suspect that Ford is waiting for the herd to get thinned out in Europe, and positioning themselves to take advantage of the same when and if that occurs.

    And thanks for the welcome 2b2. :)

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    Re: Ford Says Overseas Losses Will Triple in 2nd Quarter

    Quote Originally Posted by syr74 View Post
    It could indeed get very interesting before it gets better. That said, given what I've seen, I suspect that Ford is waiting for the herd to get thinned out in Europe, and positioning themselves to take advantage of the same when and if that occurs.

    And thanks for the welcome 2b2. :)
    There is a lot of new products right around the corner.
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