Modified: January 29, 2013 7:06 PM
Ford earnings: Analysts and experts react
North America was Ford Motor Co.'s chief source of strength last year and helped it handily beat Wall Street estimates for the fourth quarter. And the No. 2 U.S. automaker expects to earn more money in North America in 2013. Ford today predicted 2013 total operating profit would match results last year as market share gains in the United States offset deepening losses in Europe. But Ford said the sales outlook was deteriorating in Europe, and it now expects to lose $2 billion in the region in 2013, worse than the loss of $1.75 billion in 2012.
What analysts and others have to say about Ford's 2012 earnings and outlook:
"Pretax margin from North American auto operations in calendar year 2012 were the best since 1988 and we expect another strong performance in 2013. European restructuring actions are accelerating with additional charges of about $1.0 billion expected in 2013. Inventory levels in Europe are at an all-time low which should help to provide more stability in production and pricing going forward. Net automotive cash ended 2012 at $10 billion and we expect the company to generate additional surplus cash in 2013, providing flexibility for additional balance sheet improvement and shareholder return."
-- Analyst Michael Ward of Sterne Agee
"We believe there is an element of conservatism baked into Ford’s soft 2013 guidance. Ford is likely being particularly conservative as relates to 2013 North American margin guidance, whereas the outlook for higher losses in Europe is more likely truly reflective of deteriorating industry conditions."
-- Ryan Brinkman, an analyst with JPMorgan Chase & Co.
"Ford's North American operations carried their balance sheet to profitability in 2012 despite a sizable market share loss in its' home turf. Ford's dealers turned their inventory in a healthy average of 50 days in 2012, indicating a good balance of supply and demand and recorded the highest level of transaction prices for the company, up over $500 compared to the previous year (2011). However, European operations continued to be the drain on profits with no immediate recovery in the horizon and the Chinese market has not been able to post any sizable profits so far. On the bright side, the significant global foot print of Ford is also poised to be an advantage for the company, eventually, benefiting from the recovery and growth in markets outside of North America in the coming years."
-- Jesse Toprak, senior analyst at TrueCar.com
"Ford expects North American profits to be up in 2013; this is impressive considering the market view that 2013 is a transition year for Ford's North American product pipeline. Ford sees North American profits higher in 2013, with an operating margin of 10%, modestly better than our 9.7% forecast. In our view, Ford's North American business legitimately continues to reset the bar ever-higher for the company's longer-term earnings power given continued upward trajectory in the U.S. SAAR, consistent pricing discipline, and steady product cadence."
-- Peter Nesvold of Jefferies & Co.
"Ford is forecasting no margin expansion in North America and steeper losses in Europe along with the rest of international only breakeven. This undercuts the popular investor thesis that Ford offers significant earnings expansion from a booming U.S. auto market while having 'Europe-proofed' its guidance. The weak guidance is largely a function of a challenged international outlook. Ford foresees no profit contribution from South America and Asia. The challenged outlook in Europe is a function of a deteriorated outlook for industry volumes (expecting closer to 13mn units), while also being impacted by higher pension costs, and a stronger euro. In North America, Ford's earnings power remains strong, albeit likely below the expectations of many investors who were overly bullish on the region both for volumes and margins."
-- Brian Johnson of Barclays
"Europe is a mess. It's going to be tough for anyone to make any money in Europe for the foreseeable future until the economies turn around."
-- Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Mich.
Reuters, Bloomberg and David Phillips contributed to this report