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Thread: Ford increases loss projection in Europe

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    Junior Member Sharmaly's Avatar
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    Ford increases loss projection in Europe

    Ford sales in Europe have suffered with the euro zone crisis, as have other foreign car makers in the region. According to reports, the loss prediction for the quarter will nearly double. The initial prediction was a $1 billion loss. Will you be trying to buy or sell a used or new van? If this portrays you, take a look at the inventory at used car dealers.

    Making money before taxes

    Ford anticipated $8.8 billion in the quarter for pre-tax profits, which is comparable to the 2011 figures but lower than Ford wants it to be. During the second quarter, $465 million was lost, and Europe accounted for $404 million of that. In the second quarter of 2011, Ford made $2.4 billion, and the same quarter in 2011 only showed a $1 billion profit. That is a 58 percent drop.

    The quarter's $1 billion profit led to an earnings-per-share of 26 cents for Ford, a 59-cent drop compared with the previous year. Wall Street had forecasted 28 cents per share, according to a survey by 16 analysts at Thomson Reuters.

    Ford seeing terrible projections

    About 80 percent of losses from Ford Motor Co. are anticipated to come from European sales where Ford sales dropped 10 percent in the in the first half of 2012. The business anticipated losses of $570 million in the quarter internationally, which is three times worse than the quarter before it.

    Ford CEO Mulally admitted that Ford isn't really the only U.S. automaker that has been stung by horrific performance in the European theater.

    "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."

    Ford facilities could close

    In order to plug the European sales sinkhole, experts predict that Ford will need to close down one or more of its European assembly plants. Possibilities include Southampton, England and Genk, Belgium, reports indicate. Ford CFO Bob Shanks dropped to discuss the specifics of any potential plant closures, but did note that the car maker is prepared to cut back in other ways, such as shorter work days, line reductions and layoffs.

    "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.".

    Sources
    Barrons
    The Detroit News
    Southgate News-Herald
    Last edited by Ken; 07-30-2012 at 07:47 AM. Reason: Ads removed.

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