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Ford (F) Q4 Profit Tops Street, Sees $2 Bln Loss In Europe

 January 29, 2013 08:15 AM

(By Mani) Ford Motor Co. (NYSE: F) reports better-than-expected results for its fourth quarter, driven by an improvement in its American operations. However, the automaker widened its loss estimate for the Europe region.

Detroit-based Ford earned $1.6 billion, or 40 cents a share. Excluding one-time items, it earned 31 cents a share, topping the 25 cents average estimate surveyed by Thomson Reuters. The GAAP results were compared with net income of $13.6 billion, or $3.40 a share, a year earlier, when a tax gain boosted results.

Ford's quarterly revenue rose 5.5 percent to $36.5 billion, which also came in above the Street view of $32.94 billion. In the fourth quarter, total company production was about 1.5 million units, 125,000 units higher than a year ago. This is 13,000 units higher than Ford's most recent guidance. For the full year, Ford produced 5.7 million units, up 54,000 from a year ago.

Ford's North American operations reflected favorable market conditions and non-repeat of ratification bonuses. The segment recorded an increase of $1 billion in pre-tax profit for the fourth quarter and the substantial increase in operating margin.

For 2013, Ford expects the strong North America performance to continue with pre-tax profits expected to be higher than 2012, with an operating margin of about 10 percent.

However, its European operations continue to bleed due to unfavorable volume and mix. The industry for the 19 markets Ford tracks in Europe was 13.5 million units, the lowest quarterly SAAR since 1995.

Since providing guidance in October, Ford's outlook for industry volume has deteriorated. Ford now expects industry volume to be in the lower end of the range of 13 million to 14 million units. In addition, Ford is being adversely impacted by higher pension costs due to lower discount rates, and a stronger euro. As a result, Ford now expects full year 2013 results for Ford Europe to be a loss of about $2 billion, compared to prior guidance of a loss about equal to 2012.

Ford generated positive Automotive operating-related cash flow of $1 billion in the fourth quarter. Ford ended 2012 with Automotive gross cash of $24.3 billion, exceeding debt by $10 billion, and a strong liquidity position of $34.5 billion, an increase of $2.1 billion over 2011.

As a result of Ford's 2012 financial performance, the company will make profit sharing payments to approximately 45,800 eligible U.S. hourly employees on March 14, 2013. As part of the UAW-Ford collective bargaining agreement, Ford North America pre-tax profits of $8.3 billion will generate approximately $8,300 per eligible employee on a full year basis.

Meanwhile, the company made $3.4 billion in cash contributions in 2012 to its worldwide funded plans, $2.3 billion higher than 2011. This included $2 billion of discretionary contributions. For 2013, cash contributions to funded plans are expected to be about $5 billion globally, including discretionary contributions of about $3.4 billion.

The company expects first quarter production to be about 1.6 million units, up 160,000 units from a year ago, reflecting higher volume in all regions except Europe. Compared with the fourth quarter, first quarter production is up 72,000 units.

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