Overseas losses hit Ford earnings in Q1

Losses on overseas operations and a higher tax burden took a toll on Ford Motor Company in the first quarter but the US auto giant on Friday forecast a stronger performance in the second half of the year. Ford posted a sharp 46 percent fall in net income from the year-earlier quarter to $1.4 billion despite surging US sales. Chief executive officer Alan Mulally hailed the results, which mark the once-troubled company's 11th straight quarter of profits. "Our team delivered a solid performance in the first quarter with particularly strong results in North America," Mulally said in a conference call. "We remain focused on making continued progress in delivering great products, investing in global growth, building a strong business and providing profitable growth for all Ford stakeholders." A number of important product launches will help boost profits in the second half of the year, Mulally said, adding that Ford is "on track" to match the 8.8 billion profit posted in 2011. North America will be the main driver of Ford's growth this year and it is working to rapidly expand capacity in order to meet growing demand, he added. Ford is also expanding in Asia, building eight new plants in the next several years which will allow it to increase volume in the fast-growing region to one third of global sales from 15 percent today. "We have both challenges and opportunities ahead of us," Mulally said. "A key opportunity is accelerating the realization of the global scale and operating margin benefits inherent in our One Ford plan." Ford said higher tax expenses were to blame for much of the fall in first quarter profits, but also lower sales volumes in Europe and earnings downturns in other regions. Earnings per share were 35 cents, down from 61 cents a year earlier. "Lower wholesale volumes, reflecting in part weaker economic conditions in Europe, contributed to the decline from a year ago," it said. It also cited lower operating results and the costs of worker buyouts. The company's once-troubled North American unit posted a pre-tax operating profit of $2.1 billion, up from $1.8 billion in the first quarter of 2011. It credited a higher volume of vehicles sold at higher prices, with 651,000 units sold in the first three months of the year, up 36,000 units from last year. But it reported losses in its Asia Pacific-Africa and Europe divisions, and a sharp fall in Latin America profits. In Europe, which pushed back toward recession in recent months, sales were slower and dealers ran inventory down. Sales fell by 60,000 units to 372,000 vehicles but Ford managed to maintain its market share of 8.5 percent. "We continue to expect Europe to incur a loss ranging from 500 to 600 million" this year, chief financial officer Bob Shanks said. In South America, the company said it was hit by higher costs and unfavorable exchange rates, though sales volume increased by 4,000 units to 118,000 vehicles. "We continue to expect South America to generate solid profitability this year although it will be less strong than last year," chief financial officer Bob Shanks said. In the Asia Pacific-Africa division, Ford cited higher costs "associated with continued investment for future growth" and a loss of market share in Japan but said it expects the division to be profitable for the year. Total sales for the division were down 25,000 units to 217,00 vehicles.