Ford expects N.A. to power profits again in 2013
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DETROIT -- Ford Motor Co.'s game plan for 2013 is simple: The company's North American money machine must provide all the profits.
A projected loss of about $2 billion in Europe should be almost covered by a profit of nearly that much at Ford Motor Credit Co. And Ford expects its Asia Pacific Africa and South America regions to post break-even results.
Last week, Ford executives said they expect North America to be the company's profit generator this year -- and regain some market share in the process.
Ford reported North American pretax profits jumped 35 percent in 2012 to a record $8.34 billion, but global net profits fell 5 percent to $5.67 billion, largely due to the red ink in Europe.
"We are expecting growth from an industry perspective and higher share," Ford CFO Bob Shanks told reporters and analysts.
His reasons for predicting North American share growth: improved sales of pickups, Ford's biggest strength, and a full year of sales of the redesigned Ford Fusion mid-sized sedan and Escape crossover.
"Those are two of the largest segments and those two products are just hitting full stride, plus there's a refreshed Fiesta coming," he said. "So we've got some growth in the industry and favorable segmentation."
He said Ford expects to sell more vehicles at retail and to nonrental fleets but did not specify a market-share target.
For 2013, Ford expects its strong North American results to continue, with pretax profits expected to be higher than in 2012, and an operating margin of "about 10 percent."
But then there's Europe.
Shanks cited several reasons for predicting a 2013 loss there of about $2 billion, vs. 2012's $1.75 billion loss. They include continued high unemployment, a stronger euro and a recession lasting the full year.
Ford has launched an aggressive European restructuring plan, which includes closing three factories. The company is taking a page from its North American recovery playbook, trying to reduce capacity to match demand. Shanks believes the European auto industry will bottom out in 2013.
"We do think this will be the trough not only for the industry but for our profitability. We would expect to see the industry begin to recover in 2014 and our profits begin to recover," he said.
Analysts have been impressed by Ford's recovery in North America without government aid. Analyst Peter Nesvold of Jefferies & Co. said Ford's track record bodes well for its future in Europe.
"Ford is in the earliest stages of a potentially dramatic European transformation plan that we believe can restore profitability to this business intermediate-term," Nesvold wrote in a report. "Our view is that Ford's extraordinary North American results highlight that management has written the playbook on automotive restructurings. We think they'll get this right."
| Ford's 2012 scorecard | ||
| 2012 total | % change | |
| Revenues | $134.3 billion | -1% |
| Pretax profits | $7.97 billion | –9% |
| Pretax profits by region | ||
| N. America | $8.34 billion* | 35% |
| Europe | –$1.75 billion | n/a |
| S. America | $213 million | –75% |
| Asia Pacific Africa | –$92 million | n/a |
| Ford Credit | $1.7 billion | –29% |
| Net profits | $5.67 billion | –5% |
| Unit factory sales | 5.7 million | 0 |
| *Record | ||
| Source: Ford Motor Co. | ||
You can reach Bradford Wernle at bwernle@crain.com.
