Ford narrows loss in Europe
DETROIT -- Ford Motor Co. today posted fourth-quarter net income of $3 billion, nearly double the $1.6 billion the company earned in the same period a year ago, as strength in the automaker's core North American market offset losses in Europe and South America.
Fourth-quarter losses in Europe narrowed to $571 million from $732 million in the same quarter a year ago.
Ford's global pretax operating profit for the quarter fell 24 percent to $1.3 billion.
Ford posted net income of $7.2 billion for 2013, up from $5.7 billion in 2012. Its automotive operations generated a pretax profit of $6.9 billion on the year, the highest in more than a decade, helped by a large gain from one-time tax items, and a boost as U.S. sales and market share increased.
On the year, Ford lost $1.6 billion in Europe, 8 percent less than in 2012 and its third-straight annual deficit for the region. The company has said it expects its European results to improve in 2014 and for the region to return to profitability in 2015.
Global revenue increased 4 percent in the fourth quarter, to $36.3 billion, and 10 percent for the year, to $146.9 billion.
"The company had an outstanding year, earning a profit that was higher than last year's strong performance and one of our best years ever," Ford CFO Bob Shanks said in a statement. "Our results were driven by record profits in North America and Asia Pacific Africa, improved results in Europe and another solid year from Ford Credit."
Europe is "on its way to profitability in 2015," Shanks told reporters at Ford headquarters.
Ford said it expects reduced losses this year in Europe despite restructuring costs of about $400 million that will be reported in 2014 operating results.
The region's fourth-quarter smaller loss was due to favorable market factors and other items, including higher parts and services profit, offset partially by unfavorable exchange and higher costs, the company said.
The automaker's global quarterly results included a $2.1 billion gain from the addition of deferred tax assets to the balance sheet, as well as charges of $311 million for last year's pension buyouts and layoffs in Europe.
In North America, Ford earned a pretax profit of $1.7 billion in the fourth quarter, 9 percent less than the same period a year ago. But its full-year earnings for the region rose 5 percent to $8.8 billion, which the company said was a record.
The results mean Ford's 47,000 UAW-represented hourly workers will get profit-sharing checks averaging $8,800, or a total of some $414 million. That is the highest Ford has ever paid out to its workers for profit sharing. Last year's checks averaged $8,300.
Ford's operating margin in North America declined to 9.9 percent in 2013, from 10.4 percent a year earlier. It spent 27 percent more on Incentives in the fourth quarter than a year ago, according to Kelley Blue Book.
The company has said it plans to reduce production in the first quarter, and it idled some plants recently to help reduce inventories. Ford has also been hit by warranty costs for recalls on the Escape crossover and by reimbursing owners of the C-Max hybrid for overstating the car's fuel economy.
Ford plans 23 product launches in the U.S. this year, including the Mustang and a redesigned version of its top-selling and most profitable nameplate, the F-150 pickup. It brought out 11 new products in 2013.
Positive cash flow
Ford generated automotive operating cash flow of $500 million in the fourth quarter, marking its 15th consecutive quarter with positive cash flow, and record cash flow of $6.1 billion for the year. It ended 2013 with $24.8 billion in gross cash, which is $9.1 billion more than its debt.
Ford previously warned that its profit margins would be lower in 2014 due to the costs of introducing new vehicles. It said pretax profits would fall to between $7 billion and $8 billion this year.
The company reported a wider-than-expected quarterly loss of $126 million for South America, compared with a year-earlier profit.
Its $571 million loss in Europe, though smaller than the previous year, was still wider than analysts had expected.
Earnings in Asia Pacific Africa surged more than 170 percent to $106 million. The automaker passed Toyota in China last year to become fifth among foreign automakers by sales, as demand for the Focus compact led a 49 percent increase in deliveries.