Analysts say Ford may post nearly 50% drop in net income for 1Q

Article by Christian Andrei, on April 27, 2012

Ford Motor Co., which is scheduled to publish its quarterly report on Friday morning, is anticipated to post a drop in first-quarter profit by almost 50% as North American earnings could not offset losses in the company's worldwide operations. According to the average estimates of seven analysts that Bloomberg surveyed, the automakers' net income may decline to $1.34 billion, down 48% from the $2.55 billion it achieved in the same period last year.

Profits may have dropped to 36 cents a share based on the average forecast of 17 analysts. This profit figure, which was at 62 cents on the same period in 2011, excludes some items.

Barclays Capital analyst Brian Johnson estimated that the automaker may have lost $225 million in Asia and Europe. He further said that operating earnings in North America may have reached $1.8 billion, as the initiative of the automaker's CEO Alan Mulally to enhance fuel economy has seen positive results despite increasing U.S. gasoline prices.

He also commented that in terms of marketing, Ford has performed a "very good job" in positioning itself as "the fuel-economy leader among the Big Three." On the other hand, he noted that the automaker is "facing headwinds" in South America, Asia-Pacific and Europe.

Ford has cautioned that it may post a pretax loss of more than $190 million in the European region for the first quarter due to the sovereign debt crisis worsening industry overcapacity. In South America, profit is dropping as competition intensifies. The company also disclosed that it may post a loss in Asia while it is still recovering from the Thai floods which adversely affected production last year. 

In an April 18 interview, Ford's Asia boss Joe Hinrichs commented that they "certainly felt a significant effect" last year from the natural disasters in Asia -- the earthquake in Japan and the major flooding in Thailand. He further related that they continue to feel the effects during the first quarter. At the close in New York on Wednesday, the stocks of Ford increased 3% to $11.73. Apprehensions regarding the financial crisis in Europe and the slow growth in China have put pressure on Ford shares, which are down 25% from a year ago.

Topics: ford, income

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