April 24, 2013 at 7:12 AM ET
Ford Motor Co. topped Wall Street’s already optimistic earnings estimate with a 16 percent jump in first-quarter net income of $1.6 billion, or 40 cents per share.
That compared to last year’s 35-cent earnings and a 37-cent consensus estimate for the latest quarter among analysts polled by FactSet. The maker would have done still better were it not for problems in Europe which resulted in a $147 million decline in pre-tax earnings of $2.1 billion. But Ford’s results also were buoyed by the strongest results in North America in “at least” a decade.
“Our strong first quarter results provide further proof that our One Ford plan continues to deliver,” said Alan Mulally, Ford president and CEO.
The operating margin rose to 11 percent in the home market where pre-tax earnings climbed to $2.4 billion. That was the highest figure since at least 2000 when Ford began breaking out North American results as a separate business unit – and could be an all-time record.
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The strong performance reflected both the impact of ongoing cost-cutting efforts and the continued recovery of the North American automotive industry. In particular, demand was up for some of Ford’s most profitable products, including its F-Series pickups.
But the first quarter numbers weren’t entirely upbeat. While Ford eked out more modest earnings in its Asia Pacific Africa region, it suffered a modest loss in South America and remained mired deeply in the red in Europe where it expects to see losses increase for all of 2013 to about $2 billion.
For the quarter, Ford lost $462 million in Europe as sales plunged 20. With sales there running at two decade lows, even the Continent’s strongest players, such as Volkswagen and Daimler AG, today reported losses in their home market.
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Europe is “a controlled mess,” said Adam Jonas, an influential automotive analyst with Morgan Stanley.
Ford is planning to close two plants in Britain and a third in Belgium, by 2014 and expects that to eventually deliver annual savings of about $500 million.
North America -- which only a half-decade ago threatened to push Ford into bankruptcy like its domestic rivals General Motors and Chrysler – proved the real powerhouse behind Ford’s latest earnings surge.
In the U.S., Ford saw its market share rebound slightly to 11.6 percent during the first quarter of 2013, up 0.1 point from the year-earlier period. That’s on top of the overall improvement in sales as the maker more than kept up with the U.S. rebound.
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Ford did particularly well with some of its most profitable truck and crossover models, notably the big F-Series pickup which benefited not only from falling fuel prices but also from the nascent recovery in the U.S. housing market. Overall unit sales were up 11 percent in the U.S., year-over-year, according to TrueCar data, boosting Ford’s U.S. market share from 15.5 percent to 16.2 percent.
“Domestically, Ford had the best Q1 2013 performance of all Detroit-based automotive manufacturers," said Jesse Toprak, Senior Analyst for TrueCar.
Globally, Ford sold 1.497 million vehicles during the January to March period, up from 1.358 million the year before. That was, however, about 860,000 less than cross-town rival General Motors and about 930,000 short of global sales leader Toyota.
For all of 2013, Ford officials said they’re on track for a pre-tax profit “about equal to 2012,” though the company’s operating margin may drop slightly.
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