Ford profits rise on strong N. America results
US auto giant Ford reported a solid increase in quarterly earnings Wednesday thanks to a strong performance in North America, which offset weakness in Europe.
The results propelled Ford to its 15th straight quarterly profit as a result of the drastic restructuring of its operations -- a process which has been paying dividends in the United States but has not yet been completed in Europe.
"We continue to expect 2013 to be another strong year, as we go further in strengthening our global product lineup and improving the competitiveness of our operations," said Ford chief executive Alan Mulally.
Ford's net earnings of $1.6 billion were up 15.4 percent from a profit of $1.4 billion in the first quarter of 2012. Revenues came in at $35.8 billion, up 10.5 percent from the year-ago period of $32.4 billion.
Ford's results included a 20 percent increase in revenues from North America, a division for which the pre-tax profit came in at the highest level since the company began reflecting the unit as a separate business entity.
The automaker is investing heavily in the region as its market share continues to increase thanks in part to the popularity of smaller, European-style cars, such as the Fiesta and Focus.
But Ford continued to struggle with weakness in Europe where revenues sank 6.9 percent and the division sustained a $462 million loss for the quarter.
"In Europe we remain on track to meet the objectives we established, transforming our business to reach profitability by mid-decade," Mulally said in a conference call.
Much of the losses can be attributed to the cost of shuttering plants as Ford works to reduce capacity in the face of a deep decline in industry demand.
The region is expected to post a $2 billion loss this year.
Ford reached a deal with workers that will allow it to close its Genk, Belgium plant next year and production has returned to normal there following strikes which led to supply shortages. It said discussions are also "progressing" at two British plants slated for closure this year.
The automaker is also investing in new products as it seeks to win a larger piece of the shrunken market, but cautioned that the economic situation could deteriorate.
"In Europe we expect weak conditions to continue, especially in countries undergoing austerity programs," Mulally said.
"Recent policy developments are positive steps, but more are necessary."
South American results were hit by the devaluation of the Venezuelan bolivar and a weakening currency in Argentina, pushing the unit to a $218 million pre-tax loss in the quarter from a $54 million profit a year earlier.
"You can't price for that much exchange (rate shift) overnight," chief financial officer Bob Shanks said.
Ford continues to expect the region to break even in 2013, but Shanks cautioned that "the external environment is uncertain, particularly in Venezuela and Argentina."
Asia remained a bright spot with revenues up 30 percent at $282 million. Ford is aggressively expanding in the region and the cost of building seven new plants in China and India means the region is expected to simply break even in 2013.