Ford Is Making Big Progress in Europehttp://www.fool.com/investing/general/2013/10/29/ford-is-making-big-progress-in-europe.aspx Adam Levine-Weinberg
October 29, 2013
Ford Motor (NYSE: F) has had a remarkable renaissance since the Great Recession. Under the leadership of Alan Mulally, the company has become consistently profitable. Moreover, Ford has been routinely surpassing a 10% pre-tax margin in North America recently, something that would have been unthinkable just a few years ago.
However, for the past two years, Europe has been Ford's Achilles' heel. Even as its North American profitability has soared, its European business went from roughly breakeven in 2011 to a massive $1.75 billion loss in 2012. Furthermore, at the beginning of 2013, Ford CFO Bob Shanks projected that the European loss would increase to around $2 billion in 2013, due to weak market factors and restructuring costs.
Luckily, the dire outlook from early 2013 was a bit of an exaggeration. Ford has already made solid progress in its transformation plan, and it now expects to post a smaller pre-tax loss than last year's $1.75 billion figure. The company's goal of returning to profitability in Europe by 2015 is looking more and more realistic, which will be a huge driver of earnings growth between now and then.
Ford also has gained market share in Europe this year, largely thanks to a bunch of new products it had introduced. Its share of the retail market grew from 7% in Q3 2012 to 8.3% last quarter. These new products also helped Ford improve pricing last quarter, despite the competitive incentive landscape in Europe.
The result was a $240 million year-over-year improvement in European pre-tax profit, despite an additional $82 millio