Ford posted a record third quarter profit of $1.6 billion as strong growth in North America offset major losses in Europe, the number two US automaker said Tuesday.
Ford has now posted pre-tax profits for 13 consecutive quarters as it reaps the rewards of major restructuring and product revamps in North America. But Europe remains a dark cloud over its otherwise rosy results and the unit is projected to post a $1.5 billion loss this year.
“While we are facing near-term challenges in Europe, we are fully committed to transforming our business in Europe by moving decisively to match production to demand, improve revenue through new products and a stronger brand, improve our cost efficiencies and take advantage of opportunities to profitably grow our business,” Ford chief Alan Mulally said.
The painful cuts Ford implemented in the United States will now be felt in Europe where it plans to shutter three European plants and slash its workforce by about 13 percent for an annual saving of $450 to $500 million a year.
“We continue to project profitability in Europe by mid-decade and target a long-term operating margin of six to eight percent,” chief financial officer Bob Shanks said in a conference call.
Ford’s quarter earnings were essentially flat from the third quarter of 2011, but at 40 cents per share they surpassed average analyst expectations of 30 cents a share.
The automaker said it expects pre-tax operating profits for the year to be “strong” but lower than the $8.8 billion posted in 2011.
Global revenues shrank by a billion dollars in the third quarter to $32.1 billion as vehicle sales dropped by 17,000 to 1.3 million.
North American pre-tax profits rose to $2.3 billion from $1.6 billion in the third quarter of 2011 as sales grew by 17,000 vehicles to 659,000 units.
Ford’s European unit posted a $468 million loss compared with a $306 million loss a year ago as regional vehicle sales dropped to their lowest level in 20 years.