* Ford earnings strongest in N. America since at least 2000
* Ford shares rise slightly after earnings beat Wall Street
* Ford offers lump sum payouts to union retirees
* Higher taxes due to late 2011 accounting change
By Deepa Seetharaman
DETROIT, April 27 Ford Motor Co reported a
fall in quarterly profit on weakness outside North America but
still beat analyst expectations, leading to a slight uptick in
its stock price on Friday.
The No. 2 U.S. automaker reported first-quarter net income
of $1.40 billion, or 35 cents per share, down from the $2.55
billion, or 61 cents a share, a year earlier.
As China growth has slowed and European auto sales are at
their lowest levels since the mid-1990s, the company has said it
is relying on North America to boost earnings this year.
Ford lost money in Europe and China, and earnings were
weaker than a year ago in South America.
Several analysts said Ford's shares should rise slightly on
Friday as the company had signaled to investors that Europe and
China would be weak.
Ford shares rose 0.8 percent to $11.97 in premarket trading
after its profit from continuing operations beat expectations.
Excluding one-time items, the company reported a profit of
39 cents per share compared with analyst expectations of 35
cents, according to Thomson Reuters I/B/E/S.
"Our sense coming into the quarter was that investor
expectations were low and anxieties were high," said Itay
Michaeli, analyst with Citi. "Ford delivered a solid quarter led
by North America operating leverage, less severe results in
Europe and solid operating cash flow."
Joseph Spak, analyst with RBC Capital Markets, said that
Ford's loss in Europe "wasn't as bad as feared" but losses in
China were greater than expected.
Ford reported an operating loss of $95 million in China,
compared with a profit of $33 million a year ago.
North American pretax earnings were $2.1 billion, up $289
million from a year ago. That quarterly profit was the best
since at least 2000, when the company began breaking out
Still, Ford says that its earnings in the second half of
2012 will be "a little bit higher" than the first half.
"We lost in total $190 million outside of North America," in
the quarter, Chief Financial Officer Bob Shanks told reporters.
"There's a lot of interest in terms of how much that would
affect the overall profitability. I think we're able to keep it
in a box for the most part."
About half the quarterly net income fall to $1.40 billion
from $2.55 billion a year ago was due to a higher tax rate after
Ford made an accounting change late last year, it said.
Revenue fell to $32.4 billion from $33.1 billion. Analysts
had expected $31.27 billion, according to Thomson Reuters
For Europe, Ford reported a pretax loss of $149 million,
hurt by dwindling auto demand as many countries there
experienced recession-like conditions.
RETURN OF THE BLUE OVAL
Shanks said that not since 1995 have European auto sales
been as low as they were in the first quarter.
The earnings came days after Fitch Ratings upgraded Ford out
of junk bond status, the first of the three major ratings
agencies to do so. Once one of the other major agencies boosts
Ford to investment grade, the company will get back the rights
to its iconic company Blue Oval logo. [ID: nL2E8FO2QU]
The Blue Oval was mortgaged along with most of the company's
assets in 2006 as it borrowed $23 billion to fund a turnaround
from near-collapse. This enabled Ford to be the only major U.S.
automaker to avoid bankruptcy and U.S. government bailout in
Ford also announced a plan to offer lump-sum pension buyouts
to salaried retirees and former employees who are vested in its
pension plan, starting in the third quarter.
The buyout program, which Ford described as unprecedented in
its magnitude, will take a year and help the company lower its
pension obligations, which credit rating agencies typically see
In the first quarter, Ford recorded $255 million in special
charges, largely due to buyouts of workers represented by the
United Auto Workers union. About 1,700 of Ford's 41,000
UAW-represented workers took the buyout package.