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Ford CEO: 'We Just Don't Know About Europe'

By Phil LeBeau, CNBC Correspondent

NEW YORK ( CNBC) -- As Ford (F) posted better than expected first quarter earnings (39 cents a share vs. 35 cent estimate), the automaker finds itself working in two worlds.

Europe Struggles

Europe swung to a loss of $149 million (vs. profit of $293m last year) as sales dropped (down 60,000) and revenue plunged (down $1.5 billion) in a continent where the economy is reeling.

Ford CEO Alan Mulally is unsure Europe's economy has bottomed out. "We just don't know about Europe," said Mulally. "So we're going to continue taking down shifts, cutting costs and try to minimize our losses."

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Mulally won't say if Ford plans to close any plants in Europe. With no improvement in the European economy expected soon he added, "Ford has a track record of making sure production matches demand and that will be the case in Europe this year."

North America Revs Up

While Ford is struggling in Europe, it is thriving in North America. In Fact, during Q1 Ford earned $2.1 billion, its best quarter since 2000. Even more impressive, Ford's profit margin in North America climbed to 11.5% (vs. 10.3% last year).

Mulally is optimistic those margins and strength will continue as Ford stays disciplined about pricing and production. "We're not going to build and sell cars and trucks just to get market share" said Mulally. "We have a plan and will stay disciplined."

Managing the two worlds Ford finds itself in means trying to convince Wall Street that it can manage the weakness in Europe. Traditionally, it has done better than GM and other competitors in managing its European operations. A challenge it will face for the foreseeable future in that continent.

--Written by Phil LeBeau at CNBC
CNBC is a world leader in business news, providing real-time financial market coverage and business information.

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