- POSTED: 29 Jan 2014 03:28
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US auto giant Ford Motor on Tuesday reported quarterly earnings that bested expectations as higher sales in North America and a smaller loss in Europe offset declines in South America.
NEW YORK: US auto giant Ford Motor on Tuesday reported higher quarterly profits that beat expectations but warned of a tougher pricing environment in North America and rising financial risk in South America.
Ford, the second-biggest US automaker, notched a 90 percent rise in fourth-quarter earnings thanks largely to a number of tax gains. Revenues rose 3.6 percent compared with the year-ago period.
"We had an outstanding year in 2013, demonstrating that our One Ford plan continues to drive solid results and profitable growth for all," Ford chief executive Alan Mulally said in a statement.
But Ford cited some headwinds that are expected to weigh on profits in 2014. Ford has forecast 2014 pre-tax profits of $7-$8 billion, below the $8.6 billion in 2013.
The company plans a heavy schedule of 16 new or refurbished vehicles in North America, resulting in more downtown at manufacturing sites, crimping results. North America accounts for nearly one-third of Ford's sales.
Ford's North American division will also face a "tougher pricing environment" because of competition from Japanese manufacturers benefiting from a weakening yen, said chief financial officer Bob Shanks on a conference call.
The company has forecast 2014 North American operating profit margin of 8-9 percent, down from 9.9 percent in 2013.
Ford also pointed to higher risk in South America, due in part to Venezuela, where the government has imposed price controls on cars amid a huge runup in inflation.
Ford said it expects a "major devaluation" in Venezuela and that it anticipates "very low" production in the country. The company is planning for a $350 million hit to profits in the first quarter due to Venezuela.
"There are risks to this outlook given the volatility of the situation in Venezuela and increasing risk in Argentina, where devaluation of the peso is accelerating and the government recently issued controls on vehicle imports," Mulally said.
South America was also a soft spot in the most recent quarter, losing $126 million compared with a gain of $145 million last year.
Ford's fourth-quarter results reflected higher profits in Asia Pacific Africa and a smaller loss in Europe.
Ford's North America division reported higher quarterly sales but nine percent lower profits due to lower prices and $300 million in expenses associated with a recall of its Escape sport utility vehicle.
Overall fourth-quarter profit came in at $3.0 billion on revenue of $37.6 billion compared with year-ago profit of $1.6 billion on revenue of $37.6 billion. The results included $2.1 billion in favorable tax items, such as valuation allowances held against US tax-deferred assets.
The results translated into earnings of 31 cents per share, topping analyst expectations of 28 cents.
Net income for the year was $7.2 billion on revenue of $146.9 billion, up 26.3 percent from 2012 profit of $5.7 billion on revenue of $133.6 billion.
Ford shares ended 0.1 percent higher at $15.72