FORD MOTOR, the second largest US car maker, reported a lower-than-expected fourth-quarter profit as operations outside North America fell short of expectations and commodity costs shot up across all regions.
Losses in Europe nearly quadrupled during the quarter amid the ongoing debt crisis which tempered car sales.
Flooding in Thailand led to a loss in Asia and increased competition blunted profits in South America.
Ford shares fell as much as 7.7 per cent on the New York Stock Exchange before paring losses after analysts said Ford’s 2012 outlook was in line with expectations. The stock closed down 4.16 per cent at $12.21.
Higher commodity costs pinched car profit margins, which fell to 5.4 per cent last year from 6.1 per cent in 2010. Commodity costs for the year came to $2.3 billion, up slightly from the company’s $2.2 billion forecast. Ford expects those costs to rise “modestly” in 2012. Ford also said it missed estimates because of unfavourable exchange rates.
Excluding one-time items, Ford’s operating profit fell to $1.1 billion, or 20 cents per share, from nearly $1.3 billion, or 30 cents per share, a year earlier. Analysts noted Ford’s exposure in the US car market would help it ride out the challenges in Europe in 2012.
Europe accounted for nearly a quarter of Ford’s 2011 revenue and Ford predicted the market would remain uncertain.
“We have been restructuring the European business for over a decade,” said chief financial officer Lewis Booth. “But there’s still ... tremendous amount of open capacity, which results in some incentive activity levels that isn’t great for the business.”
The car maker also forecast a lower profit in South America and a modest profit in its Asia and Africa region.
But Ford projected a higher operating margin in its auto operations this year on the strength of stronger profits in North America, which generates more than half the company’s annual revenue.Ford has been able to command higher prices for its cars and trucks in North America as its line-up improves in fuel efficiency and technology. This year, Ford will launch several vehicles globally. – (Reuters)
