Business | Automotives
Strong US sales offset Ford's losses elsewhere
US automaker loses money in Europe and Asia
- AP
- Published: 00:00 January 29, 2012
Dearborn, Michigan: Strong sales and profits in the US bolstered Ford in the fourth quarter, but the European debt crisis and flooding in Thailand hurt results elsewhere.
Ford Motor's shares took a hit after the results fell short of Wall Street's expectations, but they recovered some lost ground once the company promised better — if still bumpy — results in 2012.
Ford reported $13.6 billion (Dh50 billion) in net income, but investors brushed off the result because most of that came from an accounting change. Excluding that change, earnings totalled $1.1 billion, or 20 cents a share, missing Wall Street expectations by 5 cents.
Chief Financial Officer Lewis Booth said Thai flooding and the rising cost of steel and other commodities hurt Ford more than analysts expected.
The November floods, which affected Thai parts suppliers, cost 34,000 units of production in Thailand and in South Africa, which relies on Thai-made parts. Ford also spent $2.3 billion more on commodities in 2011 than the prior year, or $100 million more than it forecast.
Bill Selesky, an auto analyst with Argus Research, said investors became more comfortable after Ford explained its accounting change and reassured investors that it expects its operating margin to increase this year. Ford's operating margin — a measure of how much the company earned after all the costs of doing business — fell to 2.2 per cent from 3 per cent in 2011, largely because of commodity costs.
"The company said: ‘Listen, we can manage through this, and North America is very, very strong,'" Selesky said.
Ford lost money in Eur-ope and Asia in the fourth quarter, and profits fell in South America. But its North American operating profit rose 33 per cent to $889 million.
For the full year, North American profits rose 15 per cent to $6.2 billion.
Ford's US market share was up for the year, and the company got higher prices for new vehicles like the Ford Explorer and Ford Focus. US buyers paid an average of $29,524 for Ford cars and trucks last year.
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