International Losses Mounting for Ford

June 29, 2012

However, the automaker still expects to be profitable in the second quarter, due to its strong domestic business.

Ford Motor Co. (IW 500/6) on Thursday said losses stemming from its international operations could hit $570 million in the quarter ending this week, but would not be enough to offset profits from domestic sales.

In a filing with the U.S. Securities and Exchange Commission, the automaker said it expects second-quarter pre-tax operating profits, excluding special items, "to be substantially lower than the same period a year ago."

"We continue to expect good results for Ford North America and Ford Credit during the second quarter, but our operations outside of North America are under increasing pressure," the statement said.

"In fact, our combined results for the second quarter for Ford South America, Ford Europe, and Ford Asia Pacific Africa could be a loss of about three times as much as the $190 million pre-tax loss incurred by these operations in the first quarter."

In South America, the company said, Ford is running into greater competition and pricing challenges as well as weakening currencies.

Europe's turn into recession has hit sales there, biting into the automaker's margins, Ford said.

"We are impacted by the serious economic crisis, compounded by an intensifying competitive environment as manufacturers react to lower consumer demand and excess production capacity."

In its Asia Pacific Africa division, operations are better, but Ford said it is "not yet fully realizing the associated revenue of new products and facilities."

"While our volume is up in the region, our investment and growth costs are rising faster for now."

"For the full year, we continue to expect to be solidly profitable," the automaker added.

Copyright Agence France-Presse, 2012

About the Author

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.