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Ford posts $3 billion quarterly profit

Tue, 28 Jan 2014

Ford Motor Co. earned $3 billion in the fourth quarter, helped by a large gain from one-time tax items, and its full-year profit rose as U.S. sales and market share increased.

The automaker's pretax operating profit fell 24 percent to $1.3 billion, while net income was nearly double the $1.6 billion it earned in the same period a year ago. The results were affected by favorable tax special items of $2.1 billion and special-item charges of $311 million.

Ford posted net income of $7.2 billion for 2013, up from $5.7 billion in 2012. Its automotive operations generated a pretax profit of $6.9 billion on the year, the highest in more than a decade.

It was Ford's 18th consecutive profitable quarter.

Revenue increased 4 percent in the fourth quarter, to $36.3 billion, and 10 percent for the year, to $146.9 billion.

"We had an outstanding year in 2013, demonstrating that our One Ford plan continues to drive solid results and profitable growth for all," Ford CEO Alan Mulally said in a statement. "We are well positioned for another solid year in 2014."

Ford sold 2,485,236 vehicles in the United States in 2013, an 11 percent increase. Its U.S. share was 15.9 percent, up from 15.5 percent in 2012.

In North America, Ford earned a pretax profit of $1.7 billion in the fourth quarter, 9 percent less than the same period a year ago. But its full-year earnings for the region rose 5 percent to $8.8 billion, which the company said was a record.

The results mean Ford's 47,000 UAW-represented hourly workers will get profit-sharing checks averaging $8,800, or a total of some $414 million. That is the highest Ford has ever paid out to its workers for profit sharing. Last year's checks averaged $8,300.

"The company had an outstanding year, earning a profit that was higher than last year's strong performance and one of our best years ever," Ford CFO Bob Shanks said in a statement. "Our results were driven by record profits in North America and Asia Pacific Africa, improved results in Europe and another solid year from Ford Credit."

The results pleased Wall Street. On a per-share basis, backing out the one-time items, Ford posted income of 31 cents a share during the quarter -- 3 cents more than analysts expected, Thomson Reuters said. Ford shares rose 4 cents in early trading to $15.75.

Ford's operating margin in North America declined to 9.9 percent in 2013, from 10.4 percent a year earlier. It spent 27 percent more on Incentives in the fourth quarter than a year ago, according to Kelley Blue Book.

The company has said it plans to reduce production in the first quarter, and it idled some plants recently to help reduce inventories. Ford has also been hit by warranty costs for recalls on the Escape crossover and by reimbursing owners of the C-Max hybrid for overstating the car's fuel economy.

Ford's fourth-quarter loss in Europe decreased to $571 million, from $732 million a year ago. On the year, it lost $1.6 in Europe, 8 percent less than in 2012. Europe is "on its way to profitability in 2015," Shanks told reporters at Ford headquarters.

Ford generated automotive operating cash flow of $500 million in the fourth quarter, marking its 15th consecutive quarter with positive cash flow, and record cash flow of $6.1 billion for the year. It ended 2013 with $24.8 billion in gross cash, which is $9.1 billion more than its debt.

Ford previously warned that its profit margins would be lower in 2014 due to the costs of introducing new vehicles. It said pretax profits would fall to between $7 billion and $8 billion this year.

New products

The company is planning 23 product launches this year, including the Mustang and a redesigned version of its top-selling and most profitable nameplate, the F-150 pickup . It brought out 11 new products in 2013.

"This level of impending product activity suggests 2014 will be a critical year for the automaker with regard to branding and planning, but also a transitional year because many of these introductions will occur in late 2014," Karl Brauer, senior analyst with KBB, said in a statement.

"The full impact of a new, more advanced F-150 and Mustang, as well as the advanced drivetrain technology Ford is introducing, won't be known until well into 2015."

Ford showed off the F-150, which will have an aluminum body that helps make it about 700 pounds lighter and more fuel-efficient, at this month's Detroit auto show. How the truck is received in the market will have a significant effect on its profits this year.

"We give Ford credit for pushing the envelope with an innovative product that some would describe as potentially game-changing," Brian Johnson, an analyst with Barclays Capital, wrote in a report Monday. "However, with the new product comes a good amount of risk."

The article Ford posts $3 billion quarterly profit, aided by tax gains originally appeared at Automotive News.

By Nick Bunkley- Automotive News