Ford forecasts $2bn loss in European market as prolonged recession hits sales
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Tuesday 29 January 2013
Europe dealt another blow to the American car-maker Ford, which forecast a $2bn (£1.3bn) loss at its continental operations this year, a drag on its performance even as its home market improves.
Gains in North America helped the company to beat Wall Street estimates in the fourth quarter of last year, with Ford reporting 31 cents in pre-tax operating profits per share, above the 25 cents pencilled in by analysts.
Hidden inside the numbers, however, was some nasty news from Europe, where the company raised its estimated loss. The $2bn figure includes around $500m in restructuring costs, as it attempts to turn around the European division. The firm's finance chief, Bob Shanks, said that with a eurozone recession likely for the full year, "clearly, we still have some difficult time in front of us". But he told reporters: "We do think it will probably bottom this year."
By contrast, Ford expects to make more money this year in North America, its most profitable region. But the No 2 US car-maker also predicted 10 per cent operating margins in North America, smaller than the 10.4 per cent reported in 2012.
The weak outlook overshadowed Ford's better-than-expected fourth-quarter results, and sent the company's shares tumbling by as much as 6.5 per cent on Wall Street. At the stock's low point, the declines wiped away more than $3bn in market value.
The forecast "undercuts the popular investor thesis that Ford offers significant earnings expansion from a booming US auto market while having 'Europe-proofed' its guidance," said Brian Johnson, an analyst at Barclays Capital, in a research note.
It was the fourth time in 12 months that Ford had ratcheted down expectations for Europe. It expects the industry to sell between 13 million and 13.5 million vehicles in the region this year. At the bottom of that range, sales in Europe would sink to their lowest level since 1993, according to the automotive consultancy IHS Automotive. Ford's shares closed 64 cents lower, or 4.64 per cent, at $13.14 in New York.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
- 4 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
King Salman: Just five days in, Saudi Arabia's new king has already overseen a beheading
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...