European slump cuts Ford's profit

04/28/2012 12:00 AM

04/27/2012 10:04 PM

Ford Motor Co. on Friday said that its profit fell by almost half in the first quarter, as higher taxes and a loss in Europe overshadowed improvements in its North American business.

Ford reported net income of $1.4 billion, 45 percent less than the $2.55 billion it earned in the same period of 2011. Revenue declined 2 percent, to $32.4 billion.

Officials attributed about half of the decline to the company's tax rate quadrupling from a year ago. In addition, its European business swung to a $149 million pretax operating loss from a $293 million operating profit.

Excluding taxes and special items, Ford earned $2.29 billion, or 39 cents a share, marking its 11th consecutive quarterly operating profit. That is 19 percent less than a year ago, when it earned $2.84 billion, or 47 cents a share, but higher than Wall Street's consensus estimate of 35 cents.

"Our team delivered a solid performance during the first quarter, with particularly strong results in North America, despite a challenging global external environment," Ford CEO Alan R. Mulally said in a statement. "We remain focused on investing for future growth and developing outstanding products with segment-leading quality, fuel-efficiency, safety, smart design and value."

Ford earned $2.13 billion in North America, up from $1.84 billion in the first quarter of 2011. The company said that was the highest quarterly profit for the region since at least 2000, when it began reporting North American results separately.

The improvement was a result of higher sales and prices paid by customers, even as increasing gasoline prices prompted a shift toward smaller vehicles.

Ford's chief financial officer, Robert Shanks, pointed out that Ford's previous high mark in North America came in 2004, when sales volumes were double and customers were flocking to big, expensive sport-utility vehicles. Its profit margin last quarter was 11.5 percent, compared with 9.2 percent in 2004.

Compared to its crosstown rivals, Ford is the furthest along in its recovery from the recession, but all three are now profitable. Chrysler reported first-quarter net income of $473 million on Thursday, a four-fold increase from a year ago. General Motors is expected to report a profit next week, after earning $7.6 billion in all of 2011.

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