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Ford upbeat despite European drag on sales, earnings

Keywords: Tags  Ford Motor, earnings report, Alan Mulally, Bob Shanks, sales projections, production forecast, Corinna Petry

CHICAGO — Ford Motor Co. expects to manufacture 770,000 cars and light trucks in North America this quarter, up 4.8 percent from fourth-quarter production of 735,000 vehicles, and expects its global output to rise 4.8 percent to 1.57 million vehicles.

The Dearborn, Mich.-based automaker projects U.S. auto industry sales will total between 15 million and 16 million vehicles this year, while European Union sales will be at the lower end of a 13-million-to-14-million range and Chinese auto sales are expected to top 19.5 million. Global sales are expected to range from 80 million to 85 million vehicles.

Ford’s chief financial officer, Bob Shanks, predicted a loss of $2 billion in Europe this year, reflecting lower sales due to the region’s recession, structural costs from shutting down facilities and the expense of payouts to laid-off employees.

"The business environment in Europe remains uncertain," Shanks said during a Jan. 29 conference call. He added that Ford will take further action to restructure its European operations as needed, but the company also is investing in new product launches to maintain its No. 2 sales spot. Ford expects to return to profitability in the region by mid-decade. "We hope this (13-million-vehicle sales projection) will be the trough," Shanks said. "We believe the industry will turn around and we will get to a profitable, growing Europe for Ford Motor Co."

In North America, healthy sales are being driven by replacement demand for aging vehicles, chairman and chief executive officer Alan Mulally said. Shanks said that Ford has added 400,000 vehicles of additional capacity and four more shifts over the past year to meet demand.

The automaker is building seven plants in the Asia-Pacific region and in Africa, and launching "lots of new products," Mulally said. "Asia-Pacific is seeing top-line results and more meaningful profits coming as we move through the decade."

Ford posted annual net income of nearly $5.67 billion, down 72 percent from $20.21 billion in 2011, on revenue that slipped 1.5 percent to $134.3 billion. Its fourth-quarter net income of $1.6 billion was down 88.3 percent from $13.62 billion in the same period a year earlier despite a 5.5-percent increase in revenue to $36.5 billion.

The company said the decline was due in large part to a $1.7-billion loss in Europe, plus pension payouts in the United States ($250 million) and Belgium ($105 million) and additional personnel- and dealer-related costs of $552 million.

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