U.S. automaker Ford Motor Company (NYSE:F) on Wednesday reported a 57 percent fall in its second quarter earnings as losses outside North America mounted. The company also warned that European woes would be a continuing overhang on the company’s performance, as it lowered full-year forecast.
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The automaker, which rode out the crisis in the automobile market in 2008 unscathed, said it earned $1 billion in the June quarter compared to $2.4 billion in the year-ago quarter. Its adjusted earnings per share - that excluded gains from the sale of two factories making auto parts – were 30 cents. That compared favourably with analysts’ estimates of 28 cents a share. Revenues in the quarter fell 6 percent to $33.3 billion, the company said.
Ford, which had earlier expected to maintain its earnings at last year’s level said that it would be below the $8.7 billion it earned in 2011.
Ford’s $2 billion profit in North America was offset by a $404 million loss in Europe, while it also witnessed a $66 million loss in Asia and a steep drop of 98 percent in profit to $5 million in the South American markets. The strong performance in North America was due to better pricing per unit and launch of new vehicles such as the Ford Escape.
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Ford’s Chief Finacial Officer Bob Shanks said Europe’s problems were “structural in nature,” than the result of a cyclical downturn in the industry. The company has estimated losses from Europe in 2012 to exceed $1 billion, up from earlier estimated $600 million.
Apart from the slowdown in Europe the company lost out on market share as it failed to incentivise dealers in the depressed market, while the higher tariff regime and popularity of older vehicles dampened demand for its products in South America. Ford is now engaged in increasing its vehicle offering in Asia.
Shares of the company ended lower by over 1% to $8.97 on Wednesday after hitting new low of $8.91 since Dec 2010.