Ford Earns 30 Cents Per Share

Ford Motor‘s ($F) earnings are out. We knew they were going to be bad; the only question was how bad. The answer: not as bad as feared. For Q2, Ford earned 30 cents per share which was two cents more than Wall Street’s forecast. Obviously, the big problem is Europe where Ford is bleeding red ink. In North America, however, business is going pretty well.

Ford said it earned $1 billion in the quarter compared to $2.4 billion in the same period last year. While its core North American business continued to perform well, it reported a loss of $404 million in Europe.

The automaker now expects to lose more than $1 billion in Europe this year, as increasingly worse sales there drag down what is otherwise a turnaround.

“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 those developments,” the company said in a statement.

European car sales have fallen to their lowest level in a decade, and most automakers are struggling with overcapacity there. Ford said the region’s problems are “more structural than cyclical” and would not improve any time soon.

Ford’s chief financial officer, Robert Shanks, called the deteriorating market conditions in Europe “very, very serious.”

The problem here isn’t the operations of the company; it’s the weak growth in Europe. The reason I’m not terribly worried about Ford is that this is a problem not endemic to Ford. I continue to believe this is a very cheap stock. The market, however, isn’t yet convinced. Once Ford is able to put together some profitable quarters from overseas, I think the stock will respond.

Posted by on July 25th, 2012 at 11:17 am


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