Focusst
Ford Focus in China. Photo Credit: Ford Motor Company.

The last 12 months have been kind to Ford (NYSE:F) investors; we've witnessed the stock price jump nearly 90%. I still think there's plenty of room for earnings growth, especially in China, that isn't yet priced into the stock. Ford was late to the game in China but has taken significant strides to gain ground on its competitors. Here is proof that Ford has made real progress in the worlds largest and fastest growing market.

Quick to profits
Ford doesn't break down revenues and earnings directly from China, but combines it into the Asia-Pacific-Africa region which recently posted its best-ever quarterly result with a pre-tax profit of $177 million. That obviously pales in comparison with pre-tax profits in North America, which have topped $2 billion, with operating margins above 10% for five of the last six quarters. 

Ford's Asia-Pacific-Africa region won't pale in comparison for much longer. By the end of the decade Ford expects 40% of its revenues to be from the region. By that time, Ford's capital expenditures in the region will have declined, quickly making it a very profitable region. Profitability will also improve in the short term from new vehicle launches that are helping boost monthly sales to record highs.

Ford set another monthly record in China for July selling over 72,000 wholesale units, an impressive 71% gain over last year. Ford's year-to-date numbers continue to climb higher and are up 50% over the same time period last year. Most of the success is due to new vehicle launches – the Kuga and EcoSport in particular which have sold 47,000 and 25,000, respectively, in China this year. There are a total of five new segment launches:

China
Information and slide via Ford's second-quarter earnings presentation.

As of the second quarter, Ford's market share in China bounced up 1.5 percentage points to 4.3% -- a very healthy improvement. Ford continues to strive toward its goal of doubling its market share to 6% by 2015 by introducing 15 new models into the region, several of which are in the slide above.

"We are beginning to see the benefits of our aggressive investment strategy in Asia Pacific Africa, with an expanding portfolio of global One Ford products tailored for the region with manufacturing hubs in China, India and ASEAN," said Bob Shanks, Ford's CFO, in a press release.

The Chanagan Ford Automobile joint venture also turned in a phenomenal month of July with almost 54,000 in wholesale vehicles sold – a 105% increase over last year. The joint venture has consistently been a strong performer for Ford with its year-to-date sales up 71% to 340,000 units.

Bottom line
North America churns out nearly all of Ford's profits these days, but that's about to quickly change when Europe returns to profitability and capital expenditure winds down in China, making its global operations significantly more profitable. Ford's global regions produce so little in profits they're sometimes overlooked in the quarterly reports but consider that Ford expects 70% of its growth over the next 10 years to come from its Asia-Pacific-Africa region. 

In addition to sales and revenue growth, Ford had 27 platforms across the globe in 2007 but by next year it will produce 80% of its sales from 14 platforms – making its entire operation more profitable and improving its economies of scale. Ford's ultimate goal of having nine global platforms and doubling its market share in the world's largest and fastest-growing automotive market is plenty of reason to be optimistic for its future earnings and share price growth – even after nearly a 90% run-up in the last 12 months.

Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.