Ford continued its run of profitable years in 2013 with strong sales in North America, Asia Pacific and South America. Even the company’s European unit saw sales increase though not enough to turn a profit.
For the fourth quarter, Ford made a strong run pushing the automaker over the finish line, where it recorded a pre-tax profit of $1.3 billion, or 31 cents per share; however, Ford recorded a favorable tax item for $2.1 billion pushing the maker’s net income for Q4 to $3 billion, or 74 cents per share: an increase of $1.4 billion compared with year-ago results.
Ford reported $8.8 billion in pre-tax profits for 2013, including a record $8.6 billion North America, although it would have been higher if not for the ongoing sluggishness of the European economy. Overall, the maker’s net income was $7.2 billion, or $1.76 per share.
“It was an outstanding year for Ford,” said Bob Shanks, Ford CFO, “one of the best in our history and second-best since 2000. Our top-line growth was in the double digits, which was better than the industry average.”
Improved sales in North America and Asia Pacific Africa, in particular China where the company is now at all-time high for market share, helped to drive the company’s profits. In Asia Pacific, the maker moved from the loss to the profit column in 2013. For the year, it reported a profit of $415 million compared with a loss of $77 million last year.
However, like most automakers, it couldn’t shake loose from a tough economy in Europe. Ford reported a loss of $1.6 billion for its European operations, despite an increase of .7 points in market share on the continent to 9.2%. The loss was still an improvement over year-ago results when the company lost $1.8 billion.
Shanks said the company expects to lose money again in Europe in 2014, but the results will improve as the maker expects to be profitable there in 2015.
He noted that the company’s guidance for 2014 remains unchanged with an expected profit between $7 billion and $8 billion.
“We’ve had a really good run up for the last five years or so,” Shanks said. “We’ve been putting building blocks in place to (continue growing). There’s a tremendous number of products being launched, we’re building six plants. This is a preparation year as we consolidate gains of the past and prepare for even stronger growth in the future.”
One of the products expected to continue the company’s run of profitability is the new F-150. Ford will shut down production at the two plants that produce the vehicle for a total of 13 weeks to handle the changeover.
The maker will shutdown its line in Dearborn for 11 weeks and in Kansas City for just two weeks for that purpose. Three of the weeks will occur during the normal shutdown period this summer. The first shut down will take place this quarter and last three weeks.
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“Ford, like all large automakers, will be put to the test this year as volume growth slows and manufacturers look for new ways to get the attention of consumers,” said Alec Gutierrez, senior analyst at Kelley Blue Book. “Ford will need to remain focused on maintaining production levels to meet demand so that they don’t have to up incentive spend.”
“Despite challenges both at home and abroad, Ford is well-positioned to remain successful in 2014 and beyond, provided that they maintain their disciplined approach to production and incentives as well as their focus on product quality that has helped them to recover from the depths of recession.”
The company’s operating margin in 2013 was 9.9%, which was at the top end of expectations, Shanks said.
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The strong year also increased Ford’s liquidity to $36.2 billion from $34.5 billion in 2012, and is allowing the company to increase its divided to shareholders for the second consecutive year. Ford also improved its global pension plans funded status nearly $10 billion compared with 2012.