(Refiles to add dropped words "the industry" in 7th paragraph)
* Ford fourth-quarter profit surpasses analyst estimates
* Outlook weaker than some analysts expect
* Euro zone likely in recession for the full year-CFO
By Deepa Seetharaman and Paul Lienert
DETROIT, Jan 29 Ford Motor Co forecast a
$2 billion loss in Europe this year, hurt by a punishing
recession that could drive down industry sales in the region
beyond 2012's nearly 20-year low.
Ford said on Tuesday its sales outlook was deteriorating in
Europe and the 2013 loss would be worse than the $1.75 billion
deficit in 2012. The automaker is closing plants and slashing
By contrast, Ford, the No. 2 U.S. automaker, expects to earn
more money in North America in 2013 and forecast 10 percent
margins. North America was its chief source of strength last
year and helped it to beat Wall Street estimates in the fourth
Still, the overall outlook was weaker than some analysts
expected. The shares fell 5.7 percent to $12.99, its sharpest
drop since August 2011.
"Upon first glance, we believe the guidance could prove a
bit conservative in North America, considering the strong
line-up, expected share gains and rational pricing," RBC Capital
Markets analyst Joseph Spak said in a research note.
"Additionally, while we don't doubt the industry
deterioration in Europe, we believe that management could be
setting the bar low," Spak added.
In South America and Asia, Ford expects to break even this
year. Overall, Ford looks for total operating profit this year
to match 2012 results as market share gains in the United States
offset Europe, where Ford expects the industry to sell between
13 million and 13.5 million vehicles this year.
Ford said industry sales last year in the 19 markets it
tracks in Europe were the lowest since 1995.
"We're likely to see, in the euro zone, a recession for the
full year," Chief Financial Officer Bob Shanks told reporters
after the company reported quarterly results.
"Clearly we still have some difficult times in front of us
(in Europe)," Shanks said. "But we do think it will probably
bottom this year."
'TAKING ITS MEDICINE'
Ford reported a per-share pretax operating profit of 31
cents in the fourth quarter, better than the average analyst
estimate of 25 cents per share, according to Thomson Reuters
I/B/E/S. Fourth-quarter revenue totaled $36.5 billion.
Ford earned nearly $1.9 billion in North America in the
quarter, almost $1 billion better than the fourth quarter of
2011. It lost $732 million in Europe, much worse than the $190
million loss it reported a year earlier.
The company spent $1.2 billion on lump-sum pension buyouts
last year, but did not say how many salaried retirees took the
The improved North American performance reflected turnaround
efforts by Alan Mulally, hired as chief executive in 2006. Under
Mulally, Ford avoided government bailouts needed by rivals
General Motors Co and Chrysler Group LLC in
Jefferies analyst Peter Nesvold estimated Ford cut capacity
in North America by a little more than one-fifth from 2006 to
2009. Higher vehicle prices commanded an additional $10 billion
in revenues from 2006 to 2010, Nesvold said.
The North American turnaround will be a blueprint for the
restructuring in Europe. Ford plans to close three factories and
reduce capacity in Europe by 18 percent to save as much as $500
million a year.
"Ford continues to take its medicine in Europe, while Asia
Pacific and South America feel upfront costs as they position
for longer-term growth," Morgan Stanley analyst Adam Jonas said.
But Europe remained unpredictable, Ford said, adding it
would take more action if necessary. Earlier, Ford had forecast
its 2013 loss to be on par with 2012 levels.
The estimate of a bigger 2013 loss is also affected by
lower interest rates and a stronger euro. Lower interest rates
increase the value of Ford's future pension liabilities.
The $2 billion loss estimate for 2013 includes about "half a
billion dollars" in restructuring costs, CFO Shanks said. "We
view that as an investment in the future."
(Reporting by Deepa Seetharaman and Paul Lienert; Additional
reporting by Laurence Frost; Editing by Jeffrey Benkoe)