DETROIT -- Ford Motor Co. expects a strong fourth-quarter performance in its key North American market to allow it to hit almost all of its financial targets for the year.
The outlook for overseas markets is more uncertain, but Ford says those markets are not likely to drag down earnings.
"Despite challenges, we expect global growth to continue at a moderate pace for the remainder of the year," CEO Alan Mulally said in a conference call last week after the company announced third-quarter results. In the United States, he expects "a modest recovery to continue."
He said Ford should achieve its goals of meeting or exceeding year-earlier pretax profits, automotive cash flow and U.S. overall and retail market share. But it now expects its full-year automotive operating margin to be about 5.7 percent, rather than topping last year's 6.1 percent.
In the third quarter, Ford's earnings softened slightly, but the automaker nonetheless posted its ninth straight quarterly pretax profit and 10th straight net profit.
Said CFO Lewis Booth: "North America is really motoring along at the moment. It's really the engine of the business, allowing us to invest long term."
In North America, Booth said, Ford expects "to see modest growth" the rest of the year for the industry as a whole as part of a "slow, steady recovery." Ford never expected to see "a classic V-shaped recovery," he added.
Industrywide sales "perhaps" will be "a little higher in the fourth quarter than for the year to date," Booth said.
"We don't expect an incentive war," he said. "We're expecting to have an orderly pricing environment in the fourth quarter."
Some observers have predicted Japanese automakers will seek to regain lost U.S. market share by offering hefty incentives, thereby driving overall sales higher. But those automakers are struggling under a stronger yen that has squeezed their margins. With currencies "at a more fairly valued level now, there's pressure on everyone to make some profit," Booth said.
As another sign that no incentive war is imminent, many retailers say supplies of many models made in Japan will remain thin into 2012.
Ford's third-quarter earnings benefited from higher U.S. sales, market share and transaction prices, plus lower incentives.
Ford is forecasting its share of the U.S. retail light-vehicle market in all of 2011 will be equal to or better than the 14.1 percent it says it held last year. Through the first nine months, Ford's retail market share was 13.9 percent, the company said.
Ford expects better availability of the Ford Explorer and Focus to help it gain share. In addition, it will be raising its fourth-quarter production to 660,000 units, split evenly among pickups, SUVs and crossovers. That's up 67,000 or 11 percent from the fourth quarter of 2010 and up 15,000 from Ford's previous production forecast.
Markets outside the United States are a mixed bag. Ford's European pretax loss widened in the latest quarter. Mulally said, "The situation in Europe represents the most significant challenge" for the rest of this year.
But Booth added, "We expect Ford of Europe to be profitable for all of 2011, despite the deteriorating environment."
The Asia Pacific Africa region, which Ford has been counting on to become a growth engine, slipped into the red in the third quarter.
Not to worry, said Booth. Ford expects the region to be a major profit contributor "by mid-decade." But, he added, "we do expect to see some variability by quarter."