This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ford Plans Action in Europe

DETROIT ( TheStreet) -- Ford (F - Get Report) made clear Wednesday that it will take action to halt its losses in Europe.

"We absolutely have overcapacity now," Ford CEO Alan Mulally said Wednesday, responding to a reporter's question about European overcapacity during the company's earnings conference call. "We are assuming this is a structural issue not a cyclical issue. It's not going to come back ... We're bringing production down because demand is not there."

Mulally and Chief Financial Officer Bob Shanks declined, however, to specify what specific course Ford will take in Europe, where it projected losses that will exceed $1 billion this year. The second-quarter pretax operating loss was $404 million, compared with a $176 million gain a year earlier.

Both executives emphasized that Ford's solution in Europe will include not simply cost reductions but also revenue gains, which will largely reflect product introductions. That is, after all, the way Mulally fixed Ford's North American division, which posted near-record quarterly profit of about $2 billion.

"We are looking at the situation in Europe with great urgency," Shanks said. "It isn't just a cost story: There are tremendous opportunities available to us on the revenue side.

"I would go back and look at what we did in North America, which was comprehensive," Shanks added. Among the new Ford products that have been introduced or will soon be introduced in Europe are the new B-Max and C-Max with a 1.0 liter engine -- both are compact multi-purpose vehicles -- and a new Transit Connect compact van.

Mulally noted that global platforms now provide the underpinning for nearly 80% of Ford's worldwide volume, which also represents a step to reducing the company's overall costs.

Mulally was also asked if he could discern the reason why Ford is trading at around $9, its lowest price since December 2009. In 2009, Ford hit a low of $1.50 in February before starting a steady climb. This year, Ford shares are down about 18%. Shares traded at $8.98, down 8, shortly after noon on Wednesday.

"It's in the context of a very tough biz environment," particularly in Europe, Mulally responded. "We have a tremendous presence and operation in Europe: We have made money there six of last eight years. (But) we are seeing very significant deterioration in the industry and economy.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
F $13.43 -1.40%
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs