Ford predicts $1bn loss in Europe
US car maker Ford, which reported a better-than-expected second-quarter profit today, doubled its forecast for losses in Europe due to a deepening economic crisis that has pushed overall car sales to their lowest level in nearly 20 years.
The company now expects to lose more than $1 billion in Europe. Earlier this year, Ford forecast an annual loss of between $500 million and $600 million.
The company also predicted it would see a lower full-year operating profit compared with 2011 due to steeper losses in Europe and slowing growth in South America.
"As we look over the next five years and lay out all of our plans for our business, we just think the situation in Europe is going to be challenging," chief financial officer Bob Shanks told reporters at Ford's headquarters in Dearborn, Michigan.
The projected losses in Europe were roughly in line with Wall Street estimates. Morgan Stanley predicts that Ford will lose $1.1 billion in Europe this year, more than the losses expected from General Motors's troubled Opel unit.
In Europe, Ford is "facing the situation with urgency," Mr Shanks said. "We're all over it."
Ford relied entirely on North America and its financing arm to turn a profit in the quarter. Ford commanded higher vehicle prices in its home market, boosting operating profit in North America to just over $2 billion.
Ford posted second-quarter net income of $1 billion, or 26 cents per share, down from $2.4 billion, or 59 cents per share, a year ago. Net income fell partly due to an accounting change this year that raised its effective tax rate.Excluding one-time items, Ford earned 30 cents per share.