Ford posts European profit in second quarter
DETROIT -- Ford Motor Co. today posted a second-quarter pre-tax profit of $2.6 billion, boosted by its first quarterly profit in Europe in three years and record North American quarterly earnings of $2.4 billion.
Ford's second-quarter profit in Europe was $14 million, compared with a $320 million loss a year ago. Ford attributed the improvement to lower costs and favorable exchange rates.
"Our One Ford plan continues to deliver, enabling us to reach our 20th consecutive quarter of profitability," CEO Mark Fields said in a statement.
Ford's global pre-tax 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 pre-tax special charges of $481 million
Revenues fell slightly to $37.4 billion.
Europe transformation
Bob Shanks, Ford Chief Financial Officer, said the quarterly profit in Europe was "a great outcome. Even though it was a small profit, it was a profit. It shows our transformation plan is working."
Ford's last positive quarter in Europe was in the second three months of 2011 when it reported a pre-tax profit of $176 million.
Ford took two special charges in the second quarter totaling $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.
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. 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," he said.
North America
Ford attributed its North American results to robust industry sales, a strong product lineup and "continued discipline in matching production to demand."
Ford affirmed its pre-tax profit guidance of a $7 billion to $8 billion pre-tax profit in 2014 during its busiest launch schedule in history. Ford is debuting 23 new products worldwide this year including 16 in North America.
Ford's operating margin in North America was 11.6 percent up from 10.6 percent in the second quarter last year.
China profit
Ford also set a quarterly record in its fast-growing Asia Pacific region with a $159 billion profit, a 3.7 percent market share for the region and a 4.6 percent market share in China. Shanks said most of the profit came from China, but he didn't give a breakdown.
South America was the only region where Ford posted a loss -- $295 million compared to a $151 million profit a year ago. Ford attributed the loss to lower volume and mix, unfavorable exchange rates and higher costs.
Rising vehicle sales in China and Europe helped to offset the negative effects of a currency crisis in Venezuela, as well as higher taxes and increased costs to introduce 23 new models worldwide this year.
Ford sales in China soared 35 percent in the year's first half to a record 549,256 vehicles, while deliveries rose 6.6 percent in Europe, which is recovering from a deep recession.
Transition year
Ford has said profits will decline this year as it spends to roll out new models such as the aluminum-bodied F-150 pickup, its top seller in the United States. The F-150 will begin production at Ford's Dearborn truck plant in October, and at its Kansas City, Missouri, plant early next year.
"This is a transition year for Ford, a year of investing for much better things in 2015 and 2016," said David Whiston, an analyst at Morningstar in Chicago. "In China, Ford is just going gangbusters."
The quarter was Ford's last one under the leadership of Alan Mulally, who retired as chief executive officer, making way for Fields.
Bradford Wernle, Reuters and Bloomberg contributed to this report
No comments:
Post a Comment