Ford Sees European Losses Worsening Since October Outlook
Chief Executive Officer Alan Mulally is using Ford's turnaround in the U.S. to guide efforts to recover in Europe more quickly than competitors including General Motors Co. Rising demand for F-Series trucks in Ford's home market paced a record $8.34 billion annual pretax profit for the company's operations in North America, which countered overseas losses. That included a fourth-quarter pretax profit of $1.87 billion.
“Europe is a mess,” Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, said today in a telephone interview. “It's going to be tough for anyone to make any money in Europe for the foreseeable future until the economies turn around.”
Ford reported net income of $5.67 billion for the full year. The profit in 2012 boosts the company's earnings to $35.2 billion the past four years after losing $30.1 billion from 2006 through 2008.
Mulally, 67, revived Ford after arriving in 2006 from Boeing Co. by using $23.4 billion that the company borrowed late that year to overhaul its lineup with fuel-efficient models such as the Focus and Fiesta. Those efforts were preceded by plans to restructure the company's North American operations beginning in October 2005.
Eoin Treacy's view
My view – The automotive industry represents a
sector which was among the largest victims of the credit crisis as consumer
spending collapsed and also one of the swiftest to respond by refocusing on
emerging markets. The companies that succeeded in this aim have prospered while
those that failed have tended to underperform.
Japan's efforts to weaken the Yen have added a new dimension to competition. Japan's automakers have struggled to remain competitive but are benefitting from the weak Yen. South Korea's sector, which had been one of the greatest beneficiaries of the strong Yen compared to the Won have rolled over.
Hyundai and Kia have both broken their progressions of higher reaction lows and are in medium-term downtrends. Sustained moves back above their respective 200-day MAs would be required to question potential for further tests of underlying trading. At the other end of the scale, Nissan broke out of a three year range this week to reassert medium-term demand dominance. Honda has a similar pattern. Suzuki Motors, Mitsubishi Motors, Toyota and Mazda Motor Corp have all broken medium-term progressions of lower rally highs and are in impressive recoveries. Daihatsu has had perhaps the most impressive advance over the last couple of months.
Two Chinese automakers are also worthy of mention. Greatwall Motors has surged since late December and is becoming increasingly susceptible to mean reversion. Brilliance Automotive is consolidating in the region of the 2011 highs and a sustained move below HK$9 would be required to question medium-term potential for a successful upward break.