Even Ford's Mulally Can't Fix Everything

DETROIT (TheStreet) -- Alan Mulally fixed Ford (F), but he did not fix the world economy, and Ford paid for that in the fourth quarter.

The automaker reported Friday that, during the quarter, it underperformed in every region of the world except for the U.S. It lost money in Asia and Europe and its earnings fell in South America. Shares fell about 4%, to $12.21, after Ford missed estimates of 25 cents by 5 cents.

Ford has been transformed under Alan Mulally, but that doesn't mean it can totally avoid negative economic trends.

The truth is that the U.S. automakers are recovering very nicely, but these sprawling international companies cannot get too far ahead of world economies. Sure, it is great to be a far-flung global enterprise, taking advantage of all the growth trends around the world. But globalization also means sensitivity to every problem that crops up.

GM(GM) has exactly the same problem. In November, on the company's third-quarter earnings call, CFO Dan Akerson said fourth-quarter results would be diminished by poor results in Europe.

As for Ford, in North America, the company reported a fourth-quarter pretax operating profit of $889 million, up from $670 million a year earlier. But in Europe, the company reported a pretax operating loss of $190 million, compared with a loss of $51 million a year earlier, due largely to higher material costs. In Asia, Ford reported a pretax operating loss of $83 million, compared with a year-earlier profit of $23 million, reflecting the impact of Thailand flooding as well as higher costs. In Latin America, Ford reported a pretax operating profit of $108 million, compared with a profit of $281 million a year earlier, due to unfavorable exchange rates and higher commodity costs.

So a $219 million gain in North America was overwhelmed by additional losses of $139 million in Europe and earnings reductions of $106 million in Asia and $173 million in South America.