Ford posts big third-quarter profit; losses in Europe decline
Ford Motor Co. posted strong third-quarter earnings, helped by growing sales and improvements in Europe and South America, troubled regions for the auto industry in recent years.
Ford said Thursday that it earned $1.3 billion, down 22% from $1.6 billion in the same period a year ago.
However, the latest results include special charges of $498 million, including $250 million to cover the restructuring of its European operations, where Ford is closing factories and laying off workers. There also was a $145-million charge covering the automaker’s buyout of the pensions of some U.S. salaried retirees.
Without the charges, Ford posted an operating profit of $2.6 billion, a 20% increase from the same quarter a year earlier and a third-quarter record for the company.
“Across the Ford enterprise we continue to restructure the business to operative profitably,” said Alan Mulally, Ford’s chief executive. “2013 is on track to be another strong year for the Ford Motor Co.”
The company also reported that revenue rose 12% to $33.9 billion.
“We expect the company to generate more than $10 billion of surplus operating cash in 2013 and 2014, providing flexibility to complete restructuring actions in Europe, de-risk its pension and increase cash returns to shareholders,” said Michael Ward, an analyst with Sterne Agee.
Ford has earned $7.3 billion through the first three quarters of this year, compared with $4.1 billion for the same period in 2012, and is raising its guidance for profits for the entire year. Previously, the automaker told investors to expect about $8 billion in net income. Now, thanks to smaller losses in Europe, it is saying profits will exceed $8 billion.
North American operating profits were just over $2.3 billion, about the same level as a year ago. Ford said strong sales of its pickup trucks were a major contributor to the strong results.
In South America, the automaker went from an operating profit of just $9 million a year ago to a gain of $159 million in the latest quarter.
Ford trimmed the bleeding in Europe, where it lost $468 million a year ago compared with the $228 million in losses for the latest quarter. The results were Ford’s best since the second quarter of 2011, Ward said.
“The environment in Europe and industry sales may have turned a corner. We are seeing signs that we should start to see very modest growth in the near term,” said Robert Shanks, Ford’s chief financial officer.
Helped by sales in China, Ford’s Asia-Pacific-Africa division continued to log strong growth. Operating profit grew to $126 million, from $45 million in the same quarter a year earlier.