(Corrects spelling of analyst name in third paragraph to Jonas
By Deepa Seetharaman and Ben Klayman
DETROIT, July 24 Ford Motor Co, the No. 2
U.S. automaker, boosted its full-year outlook and posted a
second-quarter profit that trounced expectations on the strength
of operations outside North America.
Ford said it pretax operating profit this year would be
"about equal or higher" than last year's $8 billion, rather than
"Given Ford's conservative nature, we view these seemingly
subtle language changes as fairly aggressive," Morgan Stanley
analyst Adam Jonas said in a research note. Its shares rose 2.5
percent to $17.36 in early trading.
Ford expects to be profitable in Asia this year. The company
also forecast a smaller loss in Europe in 2013 - $1.8 billion
versus its previous forecast of $2 billion.
For the second quarter, Ford reported a pretax profit of 45
cents per share, 8 cents better than the analysts' average
estimate, according to Thomson Reuters I/B/E/S.
The stronger-than-expected results were driven by profits in
Asia and South America as well as a narrower loss in Europe,
analysts said. Morgan Stanley described the Asia Pacific region
as the "star" of the quarter. The South America outcome was also
much better than the consensus target.
(Graphic on earnings: link.reuters.com/weh89t)
Ford posted its best-ever profit in Asia of $177 million as
well as a $151 million profit in South America. The automaker
also recorded a $348 million loss in Europe, smaller than the
$404 million loss posted a year earlier.
Taken together, Ford's operations in its three regions
outside North America broke even, Chief Financial Officer Bob
Shanks told reporters in Dearborn, Michigan. In the first
quarter, the combined loss was $600 million.
"We're at the beginning of the phase where over the next
several years you'll start to see the operations outside North
America take on more and more significance," Shanks said.
"You're starting to see what's possible."
TURNING POINT IN EUROPE
Ford said its restructuring in Europe was on track. The
company said improving consumer sentiment suggested the
beginning of a "stabilization" in the region, where an economic
downturn sent sales to 20-year lows in the first half.
"There is a bit of a turning point here in the sense that
it's the first time we've had heard good news incrementally out
of Ford in Europe," said Citi analyst Itay Michaeli, who has a
"buy" rating on Ford shares.
"It's not like Europe is back, but in terms of an inflection
point for news, it's significant," Michaeli added.
In North America, Ford reported a pretax profit of $2.3
billion boosted in part by higher truck sales. Its
second-quarter revenue rose 15 percent to $38.1 billion. Global
vehicle prices, excluding the impact of incentives, rose $1
billion in the quarter. Prices increased in every region except
Ford said its automotive operating margins this year would
be roughly the same as 2012, better than its previous outlook of
"about equal" or "lower."
The company also said 2013 automotive cash flow would be
"substantially higher" than last year's $3.4 billion. In the
previous quarter Ford had simply said "higher." In the first
half, Ford posted cash flow of $4 billion.
"We've already blown past what we did all of last year,"
Shanks told reporters.
Ford, the only U.S. automaker to avert a bankruptcy filing
during the 2009 financial crisis, is ramping up efforts to grow
in the United States. The company plans a faster model
changeover for the top-selling F-150 to take advantage of strong
truck demand in the United States.
Reflecting its optimism, Ford said on Tuesday it was looking
to hire 3,000 salaried workers this year, 800 more than
While many areas of Ford's headquarters were unused during
the downturn, employees are now fighting over space in the
building, Ford's human resources chief Felicia Fields told
(Reporting by Deepa Seetharaman and Ben Klayman; Editing by