Ford profit dips, hurt by losses in Europe and Asia
Ford Motor Co. saw earnings dip in the first quarter, hurt by losses in Europe and Asia.
The automaker continues do to well in the U.S., the company announced Friday, posting for the quarter its highest operating profit in North America in more than a decade.
Ford earned $1.4 billion, or 35 cents a share, down 46% from the $2.6 billion, or 61 cents a share, it made in the same period a year earlier.
Sales also slid, falling 2% to $32.5 billion from $33.1 billion.
“Our team delivered a solid performance during the first quarter, with particularly strong results in North America, despite a challenging global external environment,” said Alan Mulally, Ford’s chief executive. “We remain focused on investing for future growth and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.”
Ford also announced a plan to reduce its pension liabilities.
It will offer about 90,000 U.S. salaried retirees and former employees the option to receive a voluntary lump-sum pension payment instead of collecting monthly benefits. If an individual elects to receive the lump-sum payment, the company’s pension obligation to the individual will be settled.
“We believe this is the first time a program of this type and magnitude has been done in an ongoing pension plan,” said Bob Shanks, Ford’s chief financial officer.
He said the program will reduce Ford’s pension obligations and balance sheet volatility.
The payouts will start later this year and will be funded from existing pension plan assets.
“It is really important that we improve the risk profile of the company,” Shanks said.
Ford has a U.S. pension obligation of about $49 billion and global obligations of $74 billion.
The company said it doesn’t know how many former employees will opt out of the pension program because other businesses have not tried the same strategy.
The automaker said it could expand the program to its hourly union employees, subject to an agreement with the United Auto Workers union.
In the first quarter, Ford in North America reported an operating profit of $2.1 billion, compared to a profit of $1.8 billion a year ago. Operating profits in South America slid to $54 million from $210 million in the same quarter a year earlier.
Ford’s European operations lost $149 million, down from a profit of $293 million a year ago. The automaker was hurt by the Eurozone debt crisis and poor economic conditions in the region. This year, Ford expects to incur a loss in Europe of $500 million to $600 million, Shanks said.
Ford’s Asian operations lost $95 million compared to a profit of $33 million a year ago
Ford shares rose 13 cents, or 1%, to $12 in early trading.
The automaker forecast that earnings in the second half of this year will be higher than the first half.
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