Ford Still Profitable, But Hampered By Europe

July 25, 2012

Ford released its second-quarter earnings report this morning, and among all the charts and bulletpoints, there's both good news and bad.

We'll start with the good:

  • Ford posted a pre-tax operating profit of over $1.8 billion.
  • The company has now posted pre-tax profits for 12 consecutive quarters.
  • Sales in North America were huge, with pre-tax profits topping $2 billion -- up from $1.9 billion in the same quarter of 2011.
  • So far in 2012, Ford North America has earned over $4.1 billion in pre-tax profits, which bests the $3.7 billion it earned during the first six months of 2011.
  • All in all, Ford's global operations netted a profit of over $1 billion after taxes.

And that about does it for the good news.

Now for the bad:

  • Ford's pre-tax operating profit of $1.8 billion was a full $1 billion shy of the $2.8 billion that Ford generated in the second quarter of 2011.
  • Ford's results in South America, Europe, and Asia/Africa were not up to snuff.
  • In South America, Ford posted a pre-tax profit of $5 million -- which is nice, but it's a far cry from the $267 million the company saw during Q2 of 2011. Ford blames the shortfall on "lower volume, higher costs, and unfavorable exchange".
  • In Europe, the situation was even more dire. The company's revenue of $7.1 billion wasn't gobsmackingly lower than the $9 billion earned in 2011's second quarter. But whereas back then, the company had pre-tax profits of $176 million, this time around Ford posted a pre-tax loss of $404 million. Due to flagging sales and high incentive spending, Ford expects its European unit to post a loss of $1 billion for the year.
  • In Asia and Africa, sales were strong and the company's revenue of $2.3 billion was slightly above the $2.1 billion earned in Q2 of 2011. However, due to "higher costs associated with new products and investments to support higher volumes and future growth", Ford posted a pre-tax loss of $66 million
  • Ford Credit also took a hit, with Q2 pre-tax revenue of $438 million -- nothing to sneeze at, but well below the $604 million generated in Q2 of 2011.

Ford may not be the only Detroit automaker going through a rough patch, though. Many analysts think that General Motors will post similarly unimpressive figures when it releases Q2 data next week. Some are more optimistic about Chrysler, which will also announce Q2 numbers in the next few days. (Remember, Chrysler's strong sales have been keeping Fiat afloat.) 

We'll keep you posted on those earnings results as they appear.

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