Bad, bad quarter for Ford in Europe
Ford sees pre-tax profit of $8.8 billion
Ford projects an annual pre-tax profit of $8.8 billion for the quarter, which is consistent with 2011 figures, but still lower than at first anticipated. Ford recorded a global profit of $1 billion in the second quarter, a 58 percent drop compared with the $2.4 billion from the same quarter in 2011. Internationally, $465 million was lost during the quarter, $404 million of which came from under-performance in Europe.
The profits per share were 26 cents with the $1 billion profit, which was a 59 percent drop from the year before. Thomson Reuters did a survey that forecasted 28 cents per share, according to Wall Street.
Ford seeing terrible projections
About 80 percent of losses from Ford Motors are expected to come from European sales where Ford sales dropped 10 percent in the in the first half of 2012. The company expected losses of $570 million in the quarter internationally, which is three times worse than the quarter before it.
Allan Mulally is the Ford CEO who explained that Ford is not alone. Europe has been hurting other U.S. car makers as well.
"We are assuming that this is a structural issue," Mulally said. "It's not going to come back fast and be saved by volume. I think you're seeing the same viewpoint from most of the automobile companies."
Chances of closures
When asked about what Ford planned to do, CFP Bob Shanks would not talk about potential plant closures but said line reductions and layoffs could come next to reduce losses. The European sinkhole has brought on people to suspect a whole facility will close. Many expect it to be the Genk, Belgium plant or Southampton, England facility.
"We always have to have a base assumption," Shanks said. "There's always volatility in our business. As we develop our plans … you've got to build in enough of a cushion … to be satisfied you will be profitable in an environment that is less robust than the assumption."
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The Detroit News