Ford Motor Co. (
F)
is confident of meeting its mid decade outlook after its adjusted
profit for the fourth quarter failed to meet analysts' estimations. The company also indicated that it would maintain its market share in 2012 too besides launching newer products with the focus on quality.
The company's fourth quarter profitability suffered due to European Union suffering wider pre-tax operating loss as a result of increased material costs on commodity price rise. This apart, Asia-Pacific also suffered a loss due to increased costs in connection with new products besides investing in future growth prospects. This was partly offset by increased net pricing. The company also suffered 34,000 units loss of production from Thailand floods further impacting the results.
The Dearborn, Michigan-based Ford predicts that auto industry will see U.S. sales of 13.5 – 14.0 million units in 2012 to be driven by lower interest rate, credit availability and the replacement demand for aging cars.
Ford indicated clearly that it would continue to focus on key aspects of the One Ford Plan, which had allowed the company to report profit for the eleventh consecutive quarter. The company has made significant progress under the plan. The plan allows Ford to belligerently restructure for operational profitability at the existing demand scale besides changes in model mix, development of new products acceleration that customers would be expecting and financing the plan.
The company introduced new vehicles in the worldwide arena that includes Focus and Ranger. The company has also invested in worldwide growth markets to expand its production facilities. These include China, Russia and India.
Ford did well to turn back the tides from a precarious situation a few years back. Much of the credit should go to its CEO Alan Mulally. He has not only given thrust to quality improvement but had also expanded product base with fuel efficiency on the back of rising fuel costs. It was the only automaker that did not approach government for bail out at the height of 2007-2008 conditions. When he joined the company, Ford's debt was more than $23 billion.
The counting changes made by the company in the latest fourth quarter have yielded a benefit of whopping $12.4 billion. That the company has chose to do it in the year 2011 indicates the amount of confidence with which it sees the future for generating income.
Q4 Results
Ford reported net income of $13.62 billion or $3.40 a share compared to $190 million or 5 cents a share in the year earlier quarter. The results were favorably impacted by gains of $12.4 billion from valuation allowance. However, pre-tax operating profit was $1.1 billion, down 14.7 percent from $1.29 billion and earnings slipped 33.3 percent to 20 cents a share from 30 cents a share in the year-ago quarter.
Revenues grew 2.1 percent to $34.6 billion from $32.5 billion in the previous year quarter. Wall Street analysts had estimated the company to deliver earnings of 25 cents a share on revenues of $32.09 billion.
Revenues from North America rose by $2.4 billion to $19.6 billion with a pre-tax operating profit of $889 million versus profit of $670 million in last year quarter.
iStock Punch
Though the company's pre-tax operating profit might have come down, Ford has come a long way during the last 3 years to record 11th consecutive quarters of profit. Now the company needs to maintain the momentum and keep improving its share. The company is also returning to dividend paying list. Considering the turnaround it had made, the stock is not at all on the Sell radar.
