FORD EARNS SECOND QUARTER 2012 PRE-TAX OPERATING PROFIT
OF $1.8 BILLION, NET INCOME OF $1 BILLION
• Second quarter pre-tax operating profit was $1.8 billion, or 30
cents per share, a decrease of $1 billion
from second quarter 2011. Ford has now posted a pre-tax operating
profit for 12 consecutive quarters
• Second quarter net income was $1 billion, or 26 cents per share, a
decrease of $1.4 billion from second
quarter 2011, reflecting lower operating results except for Ford North
America and higher tax expense
• Solid second quarter results were driven by Ford North America and
Ford Credit; challenges at Ford Europe and Ford South America are
being addressed through the company's One Ford plan
• Total Automotive pre-tax operating profit was $1.4 billion, a
decrease of about $900 million from second quarter 2011
• Ford North America recorded second straight quarter with profits of
more than $2 billion and operating margin exceeding 10 percent
• Ford Credit reported a pre-tax operating profit of $438 million, a
decrease of $166 million from second quarter 2011, in line with
• Revenue was $33.3 billion, a decrease of $2.2 billion from second
• Ford ended the quarter with $33.9 billion in total Automotive
liquidity, an increase of $1 billion compared with first quarter 2012
• Ford expects full year total company pre-tax operating profit to be
strong, but lower than 2011, with positive Automotive
operating-related cash flow
DEARBORN, Mich., July 25, 2012 – Near-record profits in North America
and continued strong performance from Ford Credit helped the Ford
Motor Company [NYSE: F] deliver its 12th consecutive quarterly pre-tax
operating profit as it reports second quarter 2012 results today.
The company reported a pre-tax operating profit of $1.8 billion, or 30
cents per share, and net income of $1 billion, or 26 cents per share.
The company also continued to generate positive Automotive
operating-related cash flow, and ended the period with a strong
liquidity position of $33.9 billion, an increase of $1 billion during
"The Ford team delivered another solid quarter driven by the
strength of Ford North America and Ford Credit," said Alan
Mulally, Ford president and chief executive officer. "We remain
absolutely committed to continuing to make progress on our One Ford
plan, including dealing decisively with near-term challenges,
investing for future growth, and developing outstanding products with
segment-leading quality, fuel efficiency, safety, smart design and
Second quarter 2012 net income was affected by lower operating results
and the impact of higher tax expense compared to a year ago that
resulted from the release of the tax valuation allowance in the fourth
quarter of 2011.
Ford finished the second quarter with Automotive gross cash of $23.7
billion, an increase of $700 million during the quarter. Automotive
debt of $14.2 billion at the end of the second quarter was up from
$13.7 billion at the end of the first quarter, primarily reflecting
additional drawdowns of low-cost loans for the development of advanced
vehicle technologies. The company will make its last draw on these
loans by August 2012, and repayment of the loans begins in September
Ford also made payments of $800 million to its worldwide funded
pension plans, of which $500 million were discretionary payments to
U.S. funded plans, in line with the company's previously-disclosed
long-term strategy to de-risk its funded pension plans. Dividends paid
in the quarter totaled nearly $200 million. Automotive gross cash
exceeded debt by $9.5 billion at the end of the second quarter, a net
cash increase of $200 million during the quarter.
AUTOMOTIVE SECTOR The decrease in total Automotive pre-tax operating
profit and operating margin was more than explained by lower results
at Ford Europe, Ford South America, and Ford Asia Pacific Africa.
Ford North America
For the second straight quarter, Ford North America pre-tax operating
profit exceeded $2 billion, and operating margin exceeded 10 percent.
The increase in pre-tax results compared with strong performance in
2011 reflected higher net pricing, improved contribution costs, and
other factors, offset partially by higher structural costs for growth,
and unfavorable volume and mix including an adverse change in U.S.
The company's outlook for full year North America 2012 profits remains
unchanged. Ford expects significantly higher pre-tax operating profit
and margin compared with 2011, as consumers continue to respond to the
company's strong product line-up, including the recently-launched
all-new Escape and the all-new Fusion launching in the second half of
this year. Ford also remains committed to maintaining its competitive
cost structure in North America.
Ford South America
Pre-tax operating profit and operating margin, while slightly
positive, declined substantially compared with a year ago due to lower
volume, higher costs, and unfavorable exchange. Although net pricing
was higher compared with a year ago, it was constrained compared with
recent periods by a more intense competitive environment.
Although the company continues to expect that Ford South America will
be profitable for the full year, it now expects the level to be
substantially lower than 2011, reflecting increased competitive
pressures, weakening currencies, and changes in government policies
affecting areas such as trade and access to foreign currency.
Ford continues to work on actions to strengthen competitiveness in
this changing environment, looking at all areas of the business to
improve operating results. These actions include fully leveraging the
One Ford plan, including the introduction of an all-new lineup of
global products over the next two years, starting with the launch of
the all-new Ranger, EcoSport, and Fusion in the second half of this
Ford Europe's results compared with a year ago largely reflected
unfavorable market factors. Volume was unfavorable due to lower
industry, share and associated production adjustments to maintain
dealer stocks at appropriate levels. Net pricing was lower as the
industry responded to excess capacity with higher incentives. Higher
contribution costs also contributed to the profit decline.
Given the deteriorating external environment in Europe, Ford now
expects its full year loss in Europe to exceed $1 billion. The
magnitude of this loss will be affected by a number of factors,
including the overall economic environment, competitive actions, and
Ford's response to these developments.
The company recognizes the seriousness of the situation in Europe, and
views the challenges the industry faces as more structural than
cyclical in nature. While Ford is affected significantly because of
its strong presence in the region, the company understands what is
needed to achieve profitability and to generate an appropriate return
"We have faced challenging situations in other parts of the
business before, and successfully addressed them through our One Ford
plan," said Bob Shanks, Ford executive vice president and chief
financial officer. "We will continue to use our plan as the guide
to address challenges and opportunities in our valued European
"We are reviewing all areas of our business to address the
near-term challenges, while ensuring we build a strong foundation for
our future," said Shanks. "It is premature to discuss
details of what our plans may be in response to the situation in
Europe, but we will continue to communicate our plans at the
appropriate times with all of our stakeholders."
Ford Asia Pacific Africa
In Asia Pacific Africa, market factors were strongly positive compared
with a year ago, but more than offset by higher costs associated with
new products and investments to support higher volumes and future
growth, as well as other factors.
Ford expects results to improve in the second half of 2012, due mainly
to favorable volume and mix as Ford benefits from added capacity in
China and Thailand and the all-new Focus and Ranger.
In the second quarter of 2012, Other Automotive reported a loss of
$163 million, compared with a loss of $76 million a year ago. The loss
mainly reflects net interest expense and an unfavorable fair market
value adjustment, primarily from the company's investment in Mazda.
FINANCIAL SERVICES SECTOR
Ford Motor Credit Company
The decrease in Ford Credit's pre-tax results was in line with
expectations and is primarily explained by fewer lease terminations,
which resulted in fewer vehicles sold at a gain, and lower financing
margin. Ford Credit continues to expect full year pre-tax profit of
about $1.5 billion, and total distributions to its parent of between
$500 million and $1 billion. Ford Credit now projects managed
receivables at year end to be in the range of $85 billion to $90
billion, and managed leverage of 8-9:1 for the foreseeable future,
which is a decrease from the prior target of 10-11:1 and is consistent
with its goal of achieving and maintaining a strong investment grade
Ford Credit remains a strategic asset for Ford, delivering high levels
of quality and customer satisfaction with operating efficiencies that
are among the best.
SECOND AND THIRD QUARTER PRODUCTION VOLUMES
The increase in the company's anticipated production volume for the
third quarter, compared with a year ago, is more than explained by
higher volumes for Ford North America and Ford Asia Pacific Africa.
Compared with second quarter 2012, the company anticipates that third
quarter 2012 production will be down 45,000 units, primarily
reflecting seasonal summer shutdowns in North America and Europe.