Ford profit hit by commodity costs

Ford Motor Co posted a lower-than-expected fourth-quarter profit on disappointing results outside North America and rising commodity costs.

Excluding one-time items, Ford’s operating profit fell to US$1.1 billion, or 20 cents per share, from nearly US$1.3 billion, or 30 cents per share, a year earlier.

Analysts, on average, expected an adjusted profit of 25 cents per share, according to Thomson Reuters I/B/E/S. In premarket trading, Ford shares fell more than 5 % to US$12.15 from Thursday’s close of US$12.79.

Higher commodity costs, unfavorable exchange rates and worse results in Europe, Asia and South America hurt Ford’s profit during the quarter. Ford’s commodity costs were US$2.3 billion for the year, up slightly from its US$2.2 billion forecast.

“We saw the external environment deteriorate and that really affected most regions other than North America, and then we saw slightly greater than we expected impact of commodities, currency and also the Thai floods,” Chief Financial Officer Lewis Booth told reporters.

Ford’s losses deepened in Europe during the quarter to US$190 million compared to a US$51 million loss a year ago. Booth said Europe would remain “challenging” for some time. In 2012, Ford expects growth in the region will be tempered by the debt crisis and austerity measures.

Ford faced increased competition in South America, where it reported a pretax operating profit of US$108 million, down from US$281 million a year earlier.

Production losses due to the flooding in Thailand hurt its results in Asia where reported a quarterly loss of US$83 million, compared to a profit of US$23 million a year ago.

In the fourth quarter, Ford reported a net income of US$13.6 billion, or US$3.40 per share, buoyed by a one-time tax-related gain of US$12.4 billion. A year earlier, Ford posted net income of US$190 million, or 5 cents per share.

The higher net income was the result of an accounting change that Ford said reflects confidence in its long-term profit outlook. The one-time gain resulted in a full-year net income of US$20.2 billion, the highest annual profit since 1998.

© Thomson Reuters 2012


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