Ford posts strongest Q2 auto profit in 15 years but Europe swings to loss

DETROIT -- Ford Motor said its second-quarter earnings increased 44 percent from a year earlier to $1.9 billion, marking the best quarterly profit from its automotive business since 2000, despite continuing losses in Europe and South America.The automaker posted a record quarterly profit in North America despite lackluster sales in the U.S., as the redesigned F-150 and other vehicles commanded higher prices.Revenue declined 0.3 percent globally, but operating margins rose to 7.2 percent, from 6.6 percent a year ago.Ford said revenue rose 10 percent in North America and that margins there could end the year in the upper end of the 8.5 percent to 9.5 percent range it previously projected.“We delivered an outstanding second quarter, a great first half of 2015, and we are confident the second half of the year will be even stronger,” CEO Mark Fields said in a statement Tuesday. “The entire Ford team is focused on accelerating our One Ford plan, delivering product excellence and driving innovation in every part of our business.”In Europe, where turmoil in Russia forced Ford to abandon a plan to return to profitability this year, pretax operating losses of $14 million reversed a profit of $14 million last year. Ford’s sales in Europe rose 15.8 percent last month and are up 10.5 percent this year on strong gains by the Kuga and EcoSport SUVs, along with the Fiesta subcompact.Ford said European revenue was down 14 percent, largely because of the strong U.S. dollar. The company's underlying operating performance in Europe improved, helped by higher vehicle sales in its main European markets and Turkey, the automaker said.In South America, Ford posted a narrower pretax loss of $185 million, compared with a $295 million loss a year earlier. A currency crisis caused Ford to start selling cars in Venezuela in dollars to alleviate a shortage of greenbacks that has slashed its imports and paralyzed its plant. Ford temporarily halted production there in May because it had no foreign currency to import parts.In Ford’s Asia-Pacific region, pretax earnings rose to $192 million from $159 million a year ago. Ford’s torrid growth in China cooled considerably this year, as sales fell 3 percent in June and are up only 0.1 percent for the year as the government puts the brakes on automotive growth.“China is slowing,” Shanks said, adding that Ford has lowered its forecast for industrywide sales in China to be between 23 million and 24 million, down from a previous projection of 24.5 million to 26.5 million cars and trucks.Ford hopes to jump-start sales in China with the continued roll out of its Lincoln luxury line and introductions of the Ford Taurus sedan, Everest and Explorer SUVs later this year.The Middle East & Africa region swung to a $46 million loss.Major N.A. gainsFord said its North America results were helped by $526 million from higher prices and a $219 million reduction in incentive spending. “We were kind of getting the best of both worlds at the same time,” Shanks told reporters at Ford headquarters.Shanks said incentives on the F-150 were the lowest in the segment, despite widely publicized discounts offered on “selected vehicles in selected markets.” Ford achieved those pricing gains even though it built about 25,000 fewer F-150s in the first half of 2015 than it did a year ago, he said.“Right across the board, F-150 is fine, building momentum and clearly is going to help us push toward a stronger second half,” Shanks said. “This thing is really going to continue to perform like a rocket.”Fields has repeatedly described 2015 as a “breakthrough year” for Ford, with heavy investments in new products beginning to pay off. Fields has said the bulk of Ford’s profits this year would come in the second half, which is the opposite of the usual pattern for automakers, due largely to the F-150 changeover.“Ford’s long-term outlook remains positive,” said Karl Brauer, senior analyst with Kelley Blue Book, “but it has to resolve F-150 production issues to leverage the new truck’s -- and overall company’s -- full potential.”Automotive News Europe and Bloomberg contributed to this report

Ford posts strongest Q2 auto profit in 15 years but Europe swings to loss

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