Ford reported a $1.1 billion pretax operating earnings in fourth quarter of 2011
By Andrew, 28 Jan, 2012. 0 Comments
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In the fourth quarter of 2011, the pretax operating earnings of Ford Motor Co. dropped by 15% to $1.1 billion. This is partly because of the increasing losses in Europe as the automaker had attained an annual net profit for the third time in a row. Its quarterly automotive profits suffered due to higher commodity costs, increasing compensation costs in North America such as a one-time ratification bonus related to Ford's new contract with the United Auto Workers union, and poor exchange rates. The company posted a profit in the past year but it then incurred losses in its Asia Pacific Africa region. Its net income in the fourth quarter rose to $13.6 billion from $190 million a year ago.
It is the highest fourth quarter that Ford has ever had, helped by a one-time accounting gain. The revenue for the October-December period climbed by 6% to $34.6 billion. In a statement, Ford CEO Alan Mulally said that even with the persistent uncertainty in the external environment, the strength of its North American and Ford Credit operations enable it to continue investing for future growth.
Full-year pretax operating profit increased by 6% to $8.8 billion. Ford posted a net income of $20.2 billion for 2011, triple that of the previous figure. This is also the highest figure since 2008, driven by a non-cash special item of $12.4 billion. This increase came from the removal of a valuation allowance against deferred tax benefits. According to a U.S. filing, Ford doesn’t anymore require the reserve since it anticipates that it will be profitable in the future years and that it can soon use the tax benefits. In 2006, this resource was created as Ford started to report losses amounting to $30.1 billion through 2008. Its full-year revenues increased by 13% to $136.3 billion.
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