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Bradford Wernle
Automotive News
July 24, 2014 - 6:45 am ET

DETROIT -- Ford Motor Co. posted a second-quarter pretax profit of $2.6 billion, bolstered by a record performance in North America and its first quarterly profit in Europe in three years.

The pretax profit was up $44 million from a year earlier. Ford’s second-quarter net income was $1.3 billion, an increase of $78 million compared with last year’s quarter. Ford’s net figure was trimmed by pretax special charges of $481 million, the company said in a statement today.

Revenue fell slightly to $37.4 billion.

“Our One Ford plan continues to deliver, enabling us to reach our 20th consecutive quarter of profitability,” said CEO Mark Fields, who assumed the job on July 1 after the retirement of Alan Mulally.

The North American pretax profit was $2.4 billion. The European pretax profit was $14 million, compared with a $306 million loss a year earlier. Ford attributed the improvement there to lower costs and favorable exchange rates.

Ford also set a quarterly record for its fast growing Asia Pacific region with a $159 million profit, a 3.7 percent market share for the region and a 4.6 percent market share in China.

Ford attributed its North American results to robust industry sales, a strong product lineup and “continued discipline in matching production to demand.”

The company’s financial unit, Ford Motor Credit, posted a second quarter pretax profit of $434 million, down $20 million from last year. Ford said it expected the unit’s full year pretax profit to be higher than 2013, when it registered a $1.76 billion profit.

Ford affirmed its pretax profit guidance of a $7 billion to $8 billion pretax profit in 2014 during its busiest launch schedule in history. Ford is launching 23 new products worldwide this year including 16 in North America.

N.A. margins rise

Ford's operating margin in North America was 11.6 percent, up from 10.6 percent in the second quarter last year.

CFO Bob Shanks told reporters today that the quarterly profit in Europe was "just a great outcome.”

“Even though it was a small profit, it was a profit. It shows our transformation plan is working,” he said.

Ford’s took two special charges in the second quarter totaling the $481 million, and both related to Europe. One was a $152 million in separation charges related to the closing of its Genk, Belgium, plant at the end of this year. The other was a $329 million impairment of its investment in its Ford Sollers joint venture plant in Russia.

Committed to Russia

Shanks said the impairment in Russia would not change Ford's commitment to Russia.

"This has nothing to do with our continued participation in the Russian market,” he said. “It is potentially the largest market in Europe, and we're continuing our participation in that market. We've got a number of launches planned there."

Regarding Ford's continued guidance of a $7 billion to $8 billion profit this year, Shanks said: "We expect the second half to be lower than the first half. Some of that is seasonal. Some of it is driven by the changes" including the launch of the 2015 F-150 pickup.

Ford will shut down its Dearborn truck plant for eight weeks at the end of August to convert the F-150 pickup from a steel body to aluminum. Shanks also cited other launches such as the Mondeo sedan in Europe and the mid-cycle Ford Focus freshening.

Loss in South America, profit in Mideast and Africa

South America was the only region where Ford posted a loss -- $295 million, compared with a $151 million profit a year earlier. Ford attributed the loss to lower volume and mix, unfavorable exchange rates and higher costs.

Ford downgraded its guidance on South America for 2014 due to lower-than-expected industry volumes and unfavorable currency exchange rates. Ford lost $33 million in the region in 2013.

“The volatility of the region, including potential currency devaluations, adds uncertainty to short-term projections,” the company said.

Ford’s newest business unit, Middle East and Africa, reported a $23 million profit, up from $13 million last year. Ford created the new unit on Jan.1. The numbers were extrapolated from last year’s figures when the region was divided among other Ford business units.

http://www.autonews.com/article/201...n-n-a-record-first-european-profit-in-3-years
 

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WOW, making hay while the sun-shines!?

Ford's operating margin in North America was 11.6 percent, up from 10.6 percent in the second quarter last year.
 

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Just as I expected - Ford bit the bullet a few years ago with Europe - took the losses against revenues years ago - cut capacity - and balanced production with sales - same recipe it used in NA and continued to invest in product. If Europe ever recovers in its economy, Ford has a cash machine ready to print profit.
 
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