You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • Review: Larger iPhones eliminate reason to switch
     NEW YORK – It’s easy to dismiss Apple’s new iPhones as merely catching up to Android.
  • Alibaba poised to surge on the NYSE
      NEW YORK – Chinese e-commerce powerhouse Alibaba will say “open sesame” to the New York Stock Exchange on Friday, as its shares begin trading in a highly anticipated debut that could raise up to $25 billion.
  • 56 million at risk in data theft
    NEW YORK – Home Depot said 56 million debit and credit cards are estimated to have been breached in a data theft between April and September at its stores in the U.S. and Canada.
Advertisement

Europe dents Ford profits

Carmaker’s turnaround on track in North America

– Ford is posting record profits in North America, but it’s not enough to quell unease about the company’s prospects elsewhere.

Ford’s shares dropped nearly 5 percent Tuesday after the company said it expects to lose more money in Europe this year and break even in Asia and South America. The final straw for investors: Ford said sales will increase next year but profits will remain about the same, dashing hopes that margins will continue to grow.

The outlook “brings overly optimistic investor expectations back in check,” Barclays analyst Brian Johnson said.

The No. 2 U.S. automaker posted a record pretax profit of $8.3 billion in North America in 2012, the result of a six-year turnaround orchestrated by CEO Alan Mulally. It’s reaching back into that playbook to fix its operations in Europe, where it lost $1.75 billion. The European restructuring plan announced in October was one reason Ford’s stock has been trading at levels not seen since 2011.

But Tuesday, Ford forecast a loss of $2 billion in Europe, and company executives and Wall Street analysts reminded investors that improving the performance outside of North America – in both Europe and Asia – will take time.

“These things don’t happen in three months, six months or even a year. But we will get there,” Chief Financial Officer Bob Shanks said in a phone call with investors.

Shares fell 64 cents to $13.14, wiping out most of their gain for this year. Just two weeks ago, the shares hit an 18-month high of $14.30 after Ford announced it was doubling its annual dividend to 40 cents a share.

The outlook overshadowed another strong performance in North America last year. Ford’s F-Series pickups retained their decades-long place as the best-selling vehicles in the U.S., while sales of the Focus small car jumped 40 percent.

Ford made more money on every vehicle because it cut back on deals and added features that U.S. buyers paid a premium for, such as inflatable seat belts. Ford is also distributing record profit-sharing bonuses of $8,300 to its 45,800 U.S. workers as a result of its North American profits.

That’s where the good news ends. Ford’s 2012 earnings declined by $300 million to $5.66 billion because of the loss in Europe. Earnings fell to $1.42 a share from $1.51 a share.

Europe sales fell by 15.5 percent last year, and the company doesn’t expect things to get better soon.

“Europe will hit bottom this year,” Shanks said.

Advertisement