Ford Beating General Motors in Race to Europe Turnaround
January 28, 2013
by Craig Trudell & Keith Naughton
When Ford Motor Co. (F) posts fourth- quarter results tomorrow, the numbers probably won’t look great, likely the lowest operating profit of the year. Those figures mask the optimism coming from an unlikely place: Europe.
Using its turnaround in the U.S. as a road map, Ford is moving more briskly to recover in Europe than its competitors. While Ford will report a loss of more than $1.5 billion for the full year in Europe and has forecast a similar result for 2013, Chief Financial Officer Bob Shanks said in an interview this month during the Detroit auto show, those losses will begin to disappear in about two years.
Ford will be about a year ahead of General Motors Co. (GM) in efforts to revamp operations in the region, said Peter Nesvold, a Jefferies Group Inc. analyst with a buy rating on the shares. Ford’s board signaled increased conviction in the company’s European restructuring plan by doubling the quarterly dividend earlier this month, he said.
“In the case of Ford, ultimately, this is the team that without external help was able to accomplish in North America what almost nobody thought was going to be possible,” Nesvold, who is based in New York, said in a telephone interview. “The problems aren’t identical in Europe, but they are similar.”
Ford’s fourth-quarter revenue probably slipped 4.5 percent to $33 billion, the average of 11 estimates compiled by Bloomberg, from $34.6 billion a year earlier. The average of 19 estimates is for 26 cents of operating profit per share, up from 20 cents a year earlier.
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