{"id":49467,"date":"2012-04-27T08:35:17","date_gmt":"2012-04-27T12:35:17","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=49467"},"modified":"2012-04-27T08:35:17","modified_gmt":"2012-04-27T12:35:17","slug":"ford-q1-earnings-tumble","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2012\/04\/ford-q1-earnings-tumble\/","title":{"rendered":"Ford Q1 Earnings Tumble"},"content":{"rendered":"
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Ford earnings tumbled sharply, driven in large part by declining demand in Europe. The Ford Evos concept is shown here during its Frankfurt Motor Show preview.<\/figcaption><\/figure>\n

Ford Motor Co. saw its first quarter net income plunged 45% compared to a year ago to $1.4 billion, or 35 cents a share, the maker blaming higher taxes and lower European and Chinese sales for the sharp slide. But North American results were their best in over a decade.<\/p>\n

The maker meanwhile announced plans to offer lump-sum buyouts to as many as 90,000 of its former employees, especially white-collar workers, in a bid to reduce its pension costs.<\/p>\n

It\u2019s unclear whether the weak first quarter will impact Ford\u2019s efforts to improve its credit rating.\u00a0 The maker received a significant boost from Fitch Ratings, earlier this week, which returned the maker to investment grade.\u00a0 But other agencies, including Standard and Poor\u2019s and Moody\u2019s have yet to weigh in.<\/p>\n

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A Profitable News Source!<\/figcaption><\/figure>\n

\u201cOur team delivered a solid performance during the first quarter, with particularly strong results in North America, despite a challenging global external environment,\u201d said Ford President and CEO Alan Mulally. \u201cWe remain focused on investing for future growth and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.\u201d<\/p>\n

Ford\u2019s first quarter 2012 earnings compared with a $2.5 billion net income during the January to March period in 2011, equal to 61 cents a share.\u00a0 Revenue, meanwhile, fell 2% to $32.4 billion.<\/p>\n

According to the maker, two key factors contributed to its weak quarter.\u00a0 About half the downturn was due to higher taxes, the maker paying a 32.5% corporate rate compared with just 8% during the first quarter of 2011.<\/p>\n

Other one-time items included buyouts for 1,700 workers that cost the maker $255 million.\u00a0 Excluding such items Ford\u2019s earnings would have risen to 39 cents, actually beating Wall Street expectations.\u00a0 Analysts polled by FactSet had collectively forecast a $32.3 billion net, and 35 cents a share.<\/p>\n

The latest earnings report wasn\u2019t entirely gloomy. Ford saw its North American pre-tax operating profit rise to $2.1 billion, up from $1.8 billion a year ago \u2013 and the best performance since it began breaking out earnings for the unit in 2000.\u00a0 The operating margin for North America rose from 10.3% a year ago to 11.5%.<\/p>\n

But the other key factor for the first-quarter downturn was a slump in most of Ford\u2019s other major markets, especially Europe.\u00a0 There the maker had a pre-tax operating loss of $149 million on significantly weaker sales compared to a $293 million pre-tax profit a year ago.<\/p>\n

Worrisome, also, was Ford\u2019s slide in the booming Chinese market, demand there dipping 25,000 units for the quarter.\u00a0 Overall Chinese sales showed an unexpected hiccup during the January to March quarter, though industry leaders attending the Beijing Motor Show this week have been predicting that the market is likely to rise between 6% and 12% for the year as a whole.<\/p>\n

Ford officials, meanwhile, confirmed plans to rapidly expand production capacity in a bid to double Chinese sales to 1.2 million annually.\u00a0 (Ford targets big growth in China. <\/em>Click Here<\/span><\/a> for that story.)<\/em><\/strong><\/p>\n

Ford also experienced sales downturns in other parts of Asia, Africa and Latin America during the first quarter of 2012.<\/p>\n

A variety of factors could influence earnings in the coming months, including the ongoing financial crisis in Europe and rising gas prices in North America.\u00a0 But there the maker is hoping that its increased range of high-mileage products, such as the subcompact Fiesta and compact Focus models, as well as higher-mileage EcoBoost truck engines, will continue to appeal to consumers focused on cutting energy costs.<\/p>\n

The proposed retiree buyouts could also impact earnings.\u00a0 The maker says it does not know how many of those former employees will actually accept the offer and the final cost would vary depending on what individual workers were earnings before retirement.\u00a0 But the payout will come from the maker\u2019s global pension fund.<\/p>\n

Another issue of concern is the unexpected shortage of a resin called Nylon-12 \u2013 and also known as PA-12 \u2013 in the wake of a catastrophic explosion at a plant in Germany late last month.\u00a0 Industry officials have been scrambling for a replacement for the material, which is used in everything from seat fabrics to fuel tanks.\u00a0 Several major suppliers have warned of pending shortages, though Ford has so far said it doesn\u2019t expect to see any impact on its production.<\/p>\n

Ford\u2019s first-quarter earnings announcement followed just several days after news that Fitch was bumping the automaker\u2019s corporate credit rating to investment grade for the first time since 2005.\u00a0 That offers the possibility of a significant drop in Ford\u2019s borrowing costs.\u00a0 But the maker is waiting for S&P and Moody\u2019s to weigh in before it can fully take advantage of the upgrade.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ford earnings plunged 45% during the first quarter of 2012, driven largely by higher taxes and declining sales in both Europe and China. But, as TheDetroitBureau.com reports, the maker did post its best results in North America in more than a decade.<\/p>\n","protected":false},"author":2,"featured_media":42866,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/49467"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=49467"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/49467\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/42866"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=49467"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=49467"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=49467"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=49467"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=49467"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=49467"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}