Overseas Troubles Could Reduce Ford’s Q-1 Profits by Nearly Half

Losses in overseas markets may result in as much as a 50 percent loss in first quarter profits for Ford Motor Company. According to Bloomberg, analysts are predicting that net income may have slid to $1.34 billion, and profits could fall to 36 cents per share, down from 62 cents a share a year earlier.

Barclays Capital analyst Brian Johnson says the automaker may have lost as much as $225 million in Asia and Europe. Operating earnings in North America, however, may have reached as high as $1.8 billion.

Johnson said, “Ford has done a very good job, marketing wise, to position itself as the fuel-economy leader among the Big Three, but they’re facing headwinds in Europe, South America and Asia-Pacific.”

According to Ford, its pre-tax losses in Europe could exceed $190 million and increased competition in South America has also reduced the company’s profits in that market. Devastating floods in Thailand, and the Japan earthquake and tsunami last year also hampered production and Ford is also expected to report significant losses in the Asia market. In an interview earlier this month, Fords Asia chief Joe Hinrichs said, “We certainly felt a significant effect in 2011 from both of the natural disasters. We continued to feel that effect in the first quarter.”

Ford’s stock has slipped 25 percent in the last year over concerns about slowing growth in China and the European debt crisis. On Wednesday, Ford’s stock closed at $11.73, down 3 percent.

In a note about Ford’s first quarter earnings report, which is due out today, Jefferies & Company analyst Peter Nesvold said, “Europe remains a weak spot, and the current outlook is not likely to improve any time soon.”  This geographic theme — stronger North America, weaker international — is likely to be the key takeaway from Friday’s report.”

Despite the pessimistic forecasts, Fitch Ratings raised Ford’s bond rating to investment grade earlier this week.

The company’s stock has had a junk rating since 2005. In 2006, Alan Mulally took the helm as Ford’s CEO and instituted an aggressive cost-cutting business model that brought the company back from the brink of disaster during the global economic meltdown of 2008 and 2009.

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