July 25, 2013

For Ford, it pays to think smaller

Strong sales in Asia and the Americas propel the company's profitability.

The Associated Press

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Barclays analyst Brian Johnson said the second-quarter results should reassure investors concerned about international losses biting into North American profits.

"The results provide some comfort that break-even in Europe is achievable and South American losses will be contained," he wrote.

Ford narrowed its expected loss for the year in Europe, to $1.8 billion from $2 billion. The company has said it expects to break even in Europe in 2015.

Ford lost $348 million in Europe in the second quarter, its eighth straight quarterly loss in the region, but a $56 million improvement over the same quarter last year. Shanks noted that Ford gained market share thanks to its new vehicles.

Asia was a drag on Ford's earnings for most of the last two years. But Ford's sales jumped 47 percent in China in the first six months of this year as Ford introduced popular new vehicles like the EcoSport and Kuga SUVs. Total industry sales grew 17 percent in China.

Ford has poured money into new factories and product development in Asia as it tries to catch up to rivals such as General Motors and Volkswagen who appreciated the region's potential sooner. Ford wants a third of its sales to come from Asia by 2020.

Ford's earnings amounted to 30 cents per share in the latest quarter, the same as a year ago. Without one-time items, including separation payments in Europe, where Ford is closing several plants, the company earned 45 cents per share. That surpassed analysts' forecast of 37 cents, according to FactSet.

Revenue was up 14 percent to $38.1 billion, beating analysts' forecasts of $34.9 billion.

 

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