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Ford sales suffer in Europe
Wednesday, July 25, 2012
One leading domestic automaker continues to be negatively affected by the turmoil taking place in Europe.
Ford announced it suffered a 57 percent drop in second quarter earnings due in part to increasing losses from its operations base in Europe, causing its earnings total to fall to $1.04 billion for the quarter.
Despite a strong performance in North America, the automotive operating margin of the Dearborn, Michigan-based automaker dropped from 7 percent in the second quarter last year to 4.9 percent this year with revenue dropping to $33.3 billion from $35.5 billion.
“The company recognizes the serious of the situation in Europe, and views the challenges the industry faces as more structural than cyclical in nature,” Ford said in a statement. “While Ford is affected significantly because of its strong presence in the region, the company understands what is needed to achieve profitability and to generate an appropriate return on investments.”
In North America alone, Ford's pre-tax profit climbed by 5.3 percent to $2.01 billion, continuing its success in that region. However, it recorded a $404 million pre-tax loss overseas as new vehicle sales are at their lowest annual rate since 1995, according to the Detroit Free Press.
“The Ford team delivered another solid quarter driven by the strength of Ford North America and Ford Credit,” said Ford CEO Alan Mulally. “We remain absolutely committed to continuing to make progress on our One Ford plan, including dealing decisively with near-term challenges, investing for future growth and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.”
Bob Shanks, chief financial officer at Ford, added reports that the company has taken corrective measures in Europe by laying off temporary workers.
“We don’t see the issues we’re facing as being cyclical in nature,” he said. “This is structural in nature. We think it’s a situation we’re going to have to deal with for the foreseeable future. It’s going to take quite a long time for Europe to work through all of these issues.”
Ford and other major automakers are targeting the next generation of new car buyers with new designs and technology advancements. The new consumer-driven technologies will be presented at the 2012 CAR Management Briefing Seminars.
Investors should remain knowledgeable of the auto industry and sales figures before making online stock trading decisions.
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