A one-off, non-cash special item of US$12.4bn “for the release of almost all of the valuation allowance against the company’s net deferred tax assets” helped boost Ford’s 2011 net profit $13.7bn to 20.2bn, or $4.94 per share. Pre-tax operating profit rose $463m to $8.8bn “as strong performance in North America and Ford Credit offset challenges in other parts of the world”, the automaker said on Friday.
“This marks the company’s third year in a row of improving annual operating profits.”
Go deeper with GlobalData
President and CEO Alan Mulally said: “Despite the continued uncertainty in the external environment, the strength of our North American and Ford Credit operations allows us to continue to invest for future growth and develop outstanding products.”
Fourth quarter pre-tax operating profit fell $189m to $1.1bn while net income, thanks to that $12.4bn boost, rose $13.4bn to $13.6bn.
Ford said it began to record a valuation allowance against net deferred tax assets in the third quarter of 2006, reflecting large cumulative losses incurred, as well as its financial outlook at the time.
“Consistent delivery over the past few years of strong improvement in the company’s business results now supports the release of almost all of the valuation allowance,” it said.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataFourth quarter net income also benfited from a one-off $401m related to the sale of Ford’s Russian operations to the newly created FordSollers joint venture, which began operations on 1 October.
Ford said it would make profit sharing payments to approximately 41,600US hourly employees. Using the formula in the UAW-Ford collective bargaining agreement, the North American pre-tax profits of $6.2bn will generate approximately $6,200 per employee on a full year basis. The first-half payment of about $3,750 each was distributed in December.
“2011 marked a milestone year in our work to strengthen our balance sheet. We increased Automotive cash, reduced debt and improved liquidity, clearing the way for us to resume paying a quarterly dividend,” said CFO Lewis Booth.
Fourth quarter automotive pre-tax operating profit fell $155m to $586m due to higher costs including hourly pay in North America related to the new UAW agreement and unfavorable exchange rates.
Full year pre-tax operating profit was up $1bn to $6.3bn after strong performance in North America and a “solid profit” in South America offset by results for Asia Pacific Africa and Europe.
Total vehicle wholesales in the fourth quarter were 1.4m units, up 38,000 units from fourth quarter 2010. Higher wholesales in North America were offset by lower wholesales in South America, Europe and Asia Pacific Africa. Full year wholesales were 5.7m units, an increase of 382,000 units.
Total automotive revenue in the fourth quarter was $32.6bn, up $2.3bn from fourth quarter 2010. Full year automotive revenue was $128.2bn, up $17bn.
The North America region booked a pre-tax operating profit of $889m, up from $670m a year ago while the pre-tax operating margin improved to 4.5% from 3.9%.
Revenue in the fourth quarter was $19.6bn, up $2.4bn.
For the full year, North America reported a pre-tax operating profit of $6.2bn, compared with $5.4bn a year ago.
South America Q4 pre-tax operating profit fell to $108m from $281m a year ago due to unfavourable exchange and higher costs. Revenue in the fourth quarter was flat at $2.8bn.
Full year pre-tax operating profit fell from $1bn to $861m.
Europe booked a Q4 pre-tax operating loss of $190m, compared with a loss of $51m a year ago due mainly to higher material costs. Revenue was $8.3bn, up $200m.
The Europe region reported a full year pre-tax operating loss of $27m, compared with a profit of $182m in 2010.
Asia Pacific Africa region reported a pre-tax operating loss of $83m, compared with a profit of $23m a year ago. The decline reflects unfavorable volume and mix from the impact of the Thailand flooding, as well as higher costs associated with new products and investments for future growth. The company estimated the production impact from Thailand flooding was approximately 34,000 units. Revenue in the fourth quarter was $1.9bn, down $300m.
Asia Pacific Africa’s fully year pre-tax operating loss of $92m compared with a profit of $189m in 2010.
In the fourth quarter, Ford Credit reported a pre-tax operating profit of $506m compared with $572m. Full year pre-tax operating profit was $2.4bn versus $3.1bn.
Ford said it expects US full year industry volume to be in the range of 13.5m to 14.5m vehicles with European full year industry sales in the 19 markets it tracks in the range of 14m to 15m. Both estimates also include medium and heavy trucks.
Automotive pre-tax operating profit is expectd to improve from 2011 with Ford Credit “solidly profitable, although at a lower level than 2011. Total company pre-tax operating profit is expected to be about equal to 2011”.
Automotive structural costs are expected to increase by less than $2bn to support higher volumes, new product launches and global growth plans. Although the company expects an increase in commodity costs, the increase is not expected to be material. Automotive operating margin is expected to improve from 2011.
