This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Ford: A Tale of Two Continents

DETROIT ( TheStreet) -- The new Ford (F - Get Report) C-Max compact hybrid crossover is "flying off the showroom lots," said Chief Financial Officer Bob Shanks. But in Europe auto sales are so weak that Ford had to delay introduction of the Mondeo, a Fusion variant, from 2013 to 2014.

The juxtaposition of the reception, or lack thereof, for the two new vehicles summarizes the situation Ford outlined Tuesday on its fourth-quarter earnings call - record profit in North America combined with continued losses in Europe's ugly auto economy.

The European outlook is even worse than it was in October, when Ford announced a restructuring plan that included closing three plants and taking a $1.5 billion loss for the year. On Tuesday, the loss in Europe turned out to be $732 million for the fourth quarter and $1.8 billion for the year, and Ford said the loss will grow to $2 billion in 2013.

Can growth in North America overcome the stall in Europe? Investors don't think so. In midday trading, Ford shares were down 82 cents to $12.96.

Ford shares soared in the latter part of the fourth quarter of 2012. They closed at $10.50 on Nov. 15 and ended the year at $12.95. Shares started 2013 at $13.23 and rose as high as $14.30 in mid-January. While this is not at all the Apple (APPL) story, it seems clear that the optimism about the automaker's overall short-term outlook has confronted a relatively disappointing reality.

On the earnings call, Shanks detailed the contrasting continents' situations, forecasting that European full-year industry volume will be at the lower end of an estimated 13 million to 14 million units, and that Ford will have to bear the cost of restructuring, investment in new product and accelerated depreciation for plants that will close. Delaying the introduction of Mondeo, for instance, represents an opportunity cost of several hundred million dollars, he said.

Looking ahead, Ford anticipates it will all pay off some day, just as it did in North America. By mid-decade, the company expects it will be generating profits in Europe.

"We will continue to look at the way we transformed the business in North America," said CEO Alan Mulally. "The most important thing is to continue to invest in the products. We can bring the very best cars and trucks to Europe even with the current slowdown, (and) also continue to be there with a complete family of cars as the recovery starts to happen."

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
F $16.34 0.00%
TM $135.37 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs