Ford on Tuesday announced it had booked its highest fourth quarter pre-tax profit in over a decade. Full year pre-tax profit was US$8bn and net income $5.7 bn.
Pre-tax profit was nonetheless down $797m from a year ago. Excluding the impact of 2011 changes in valuation allowance against deferred tax assets, full year 2012 net income was $307m lower than 2011. Revenue was $134.3bn, down $2bn.
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Fourth quarter pre-tax profit was $1.7bn, or $0.31 per share, an increase of $577m from fourth quarter 2011.
Fourth quarter net income was $1.6bn, or $0.40 per share; excluding impact of 2011 changes in valuation allowance against deferred tax assets, fourth quarter net income was $565m higher than 2011. Revenue was up $1.9bn to $36.5bn.
For 2013, the automaker expects another strong year, with total company operating profit to be about equal to 2012 and automotive operating margin to be about equal to or lower than 2012.
“The Ford team delivered strong results once again, underscoring that our One Ford plan is working,” said Alan Mulally, Ford president and CEO. “We are well positioned for another strong year in 2013.”
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By GlobalDataThe company will make profit sharing payments of about $8,300 to 45,800 hourly employees on 14 March as part of its collective bargaining agreement with the UAW.
AUTOMOTIVE SECTOR
Automotive full-year pre-tax profit of $6.3bn was driven by North American results, which set fourth quarter and full year records for pre-tax profit and operating margin. Full year pre-tax profit was $8.3bn with an operating margin of 10.4%. Revenue was down $1.6bn to $126.6bn.
Full year automotive pre-tax profit was about equal to a year ago, due to higher net pricing and the non-repeat of 2011 UAW ratification bonuses, offset by higher costs, mainly structural, and unfavorable volume.
For the full year, North America pre-tax profit ($8.3bn, up $2.15bn )and operating margin (10.4%, up 2.1%) were both records. Volume and revenue (+$4.9bn to $79.9bn) were also higher.
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%.
South America Q4 pre-tax profit and operating margin were both higher than a year ago. But, for the full year, pre-tax profit was $213m, substantially lower than $861m a year ago.
For 2013, Ford expects its South America results to be about breakeven.
A decline in Ford Europe‘s fourth quarter pre-tax results (from a loss of $190m to $732m) was “more than explained by unfavorable volume and mix,” the automaker said. The industry for the 19 markets it tracks in Europe was 13.5m units, the lowest quarterly SAAR since 1995.
For the full year, Ford Europe “continued to be negatively impacted by the challenging economic conditions in the region”.
European industry volume in 2013 is now expected to be in the lower end of the range of 13m to 14m units. Adversely impacted by higher pension costs due to lower discount rates, and a stronger euro, Ford now expects full year 2013 results for Europe to be a loss of about $2bn, compared to prior guidance of a loss about equal to 2012’s $1.75bn pre-tax loss (versus $27m in 2011).
“The business environment remains uncertain, and Ford will continue to monitor the situation in Europe and take further action as necessary,” it said.
While Ford Asia Pacific Africa posted a full year loss of $77m (a $15m improvement over 2011), it sold over 1m vehicles for the first time, and booked a record $10bn in revenue.
For 2013, Ford expects Asia Pacific Africa to be about breakeven.
For 2013, Ford Credit projects full year pre-tax profit about equal to 2012 ($1.7m pre-tax profit, down $707m).
In the fourth quarter, total company production was about 1.5m units, 125,000 units higher than a year ago and 13,000 units higher than most recent guidance.
For the full year, Ford produced 5.7m units, up 54,000 from 2011.
The company expects first quarter production to be about 1.6m 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.
OUTLOOK
Ford expects US production of 13.5-14.5m units in 2013 and 14-15m in Europe. It expects automotive pre-tax profit higher than 2012’s $6.3bn and a total company result “about equal” to last year’s $8bn.
“Our focus this year will be to continue our strong performance in North America and at Ford Credit, while at the same time, addressing challenges and opportunities in other parts of our business,” said Bob Shanks, Ford chief financial officer. “In Europe this means executing our transformation plan, while in South America we will continue to refresh our entire product line-up, and in Asia Pacific we will continue to invest for even stronger, profitable growth in the future.”
