With pre-tax profits totaling nearly $2.2 billion, Ford Motor Company had its best third quarter ever, Read writes.
Ford Motor Company has announced its best-ever third quarter, with pre-tax profits totaling nearly $2.2 billion. There are a lot of people to thank for those results, but North American shoppers are at the top of the list.
In North America alone, Ford saw pre-tax revenue of over $2.3 billion -- a substantial increase from the $1.55 billion earned in the third quarter of 2011. As of September 30, Ford's North American operations had generated nearly $6.5 billion in pre-tax revenue for the year, which is bigger than its pre-tax figure for the entirety of 2011. Ford credits these numbers to its strong product lineup and brisk sales.
In South America, Ford also stayed in the black, with pre-tax revenues of $9 million. However, that number seems pretty low compared to the third quarter of 2011, when the company raked in $276 million. Ford blames the decline on increased competition in the marketplace, higher costs of doing business, and unfavorable exchange rates -- especially the weakening Brazilian real -- but the company expects its South American unit to end the year in positive territory.
Earnings in Asia were strong, too: the company wrapped up the third quarter with pre-tax profits of $45 million, which was nearly the mirror-image of the $43 million loss Ford recorded in Q3 of 2011. Pre-tax revenues in the region remain down $116 million for the year, but Ford says that it's turned a corner, helped in part by the debut of the Ford Focus in China and by good exchange rates throughout the region. However, those won't completely offset losses from earlier in the year, leaving Ford to finish 2012 in the red.
Not surprisingly, Ford's biggest trouble spot is Europe, where the company wrapped up Q3 $468 million in the hole, bringing losses to over $1 billion for the year-to-date. This isn't surprising, given Europe's ongoing economic concerns; in fact, Ford notes that across theauto industry, sales in Europe have plummeted 20% over the past five years, and most economists expect that recovery in the region won't really begin until 2015. And even then, Ford isn't sure that the recovery will return sales to pre-crisis levels, pointing to larger issues that may permanently change Europe's business landscape.
To Ford's credit, it's taking serious steps to address those challenges, making changes on par with those carried out in the U.S. during the Great Recession. Those steps include shuttering plants and revamping the company's production footprint, as well as rolling out 15 new global vehicles (like the 2013 Ford Focus) over the next five years.
In the short term, though, those steps won't do much for Ford's balance sheet. The company expects its European division to end the year more than $1.5 billion in the red.
As a whole, however, Ford should close out the year deep in positive territory. As of September 30, the company boasted pre-tax profits of $6.3 billion, and given the booming U.S. auto market, that sum is likely to increase over the final three months of the year. We'll keep you posted.