Ford rolling in profit despite grim Europe

DETROIT may have filed for bankruptcy, but one of its favourite sons this week declared its sixteenth consecutive profitable quarter.

Ford Motor Company made a bigger-than-projected pre-tax profit of US$2.6 billion ($A2.8b) between March and June, buoyed by significant gains in a resurgent North America fast returning to pre-GFC sales levels.

The Blue Oval also posted its best-ever quarterly pre-tax profit in the booming Asia Pacific Africa region, which includes Australia but has its hubs in China and India. The fast-growing South American region is back in the black, too.

Things were even up for problem child Ford of Europe, with pre-tax losses narrowing by $56 million ($A61) in total. In response, Ford scaled back its projected annual loss there by about $200 million ($A218m).

Ford’s decision in May to shutter its Australian factories by 2016 was given only one brief line in the company’s presentation, and rather than referring directly to the closure, the company instead spoke of a “business transformation and product acceleration” – although Ford president and chief execcutive Alan Mulally did refer to its closure in his address to analysts.

But the grim news for Ford here is far from a common thread – in fact it’s quite opposite, with the strong second quarter showing upward-facing trends across all global regions.

On the back of this, Ford projects an annual global pre-tax profit in 2013 equal to or slightly higher than last year’s figure of $8.0 billion ($A8.7b) – perhaps as high as 2011’s sterling $8.8 billion ($A9.6b) windfall.

Ford’s global sales volume and revenue from product (as opposed to additional revenue from its Ford Credit finance arm) were up 16 per cent and 15 per cent respectively. This reflects wider industry trends of sales growth in all regions, bar recession-hit Europe.

Ford produced about 1.7 million cars last quarter, 218,000 more than in the second quarter of 2012, reflecting higher volumes in all regions. In the third quarter, it expects total company production will be about 1.6 million units, up 195,000 units from a year ago, also reflecting higher volumes in all regions.

Again the jewel in Ford’s crown is its home market of North America. The company made its best ever profit there in the first quarter of 2013, and built on this foundation with a $2.3 billion ($A2.5b) pre-tax profit between March and June.

It’s the fifth time Ford has made at least $2 billion ($A2.2b) in the past six quarters, and comes from healthy growth in pickup sales – the F-Series is flying out showroom doors – and the US market’s continued post-GFC recovery.

Ford made $151 million ($A165m) in pre-tax profit in South America last quarter, thanks partially to higher industry sales, but also a greater proportion of conquest sales, with its market share also on the up. This figure was up from just $5 million ($A5.5) in the second quarter of 2012.

However, the company is still $67 million ($A73m) in the red this year, and expects to recover only to the point of breaking even by December. Unfavourable exchange rates and devalued currencies are being attributed the blame.

The Asia Pacific Africa region recorded a record pre-tax profit of $177 million ($A193m) last quarter, a $243 million ($A265m) turnaround on 2012. Volume across the region was up 27 per cent, while revenue grew 35 per cent. This latter figure doesn’t include its Chinese joint ventures.

Like almost every other company, Ford keeps losing money in Europe, although its $348 million ($A380m) loss was an improvement on the $404 million ($A440m) loss over this time last year.

The recorded operating margin was also negative 4.6 per cent, with many factories operating well below capacity. The Blue Oval’s European re-structure has resulted in the closure of three under-used factories (two in Britain and one in Belgium) and the loss of around 6000 jobs.

“Our strong second quarter with improved results in every region around the world is another proof point that our One Ford plan is continuing to deliver and is building momentum,” said Mr Mulally.