Ford sees European profit by 2015 as overhaul picks up speed


By Deepa Seetharaman and Ben Klayman

DETROIT, Oct 24 (Reuters) - Ford Motor Co boosted itsfull-year global profit outlook on Thursday as its Europeanpicture brightened and stronger overseas demand sparkedbetter-than-expected third-quarter results.

The No. 2 U.S. automaker now expects 2013 pretax profit totop last year's $8 billion and losses in Europe to be less thanthey were in 2012. Chief Financial Officer Bob Shanks said Fordsees the European unit being profitable in 2015.

Ford's ongoing overhaul in Europe has borrowed heavily fromChief Executive Alan Mulally's strategy that led to Ford's NorthAmerican renaissance. Executives had forecast a return tobreakeven in Europe by mid-decade.

"The team is actually doing a better job, even than what wehad expected in terms of driving forward this transformationplan" in Europe, Shanks said on a conference call. "This stillleaves us firmly on track, maybe more firmly on track, to aprofit, not breakeven, but a profit by 2015."

Ford said previously its global profit would be equal tothat of 2012 and losses in Europe would be about $1.8 billion.

Ford's third-quarter net income fell by a little more thanone-fifth to $1.27 billion, or 31 cents per share, due to nearly$500 million in special charges, including $250 million spent onrestructuring Europe.

Excluding one-time items, Ford posted adjusted third quarterearnings of 45 cents per share, 7 cents better than the averageestimate of analysts polled by Thomson Reuters I/B/E/S.

Also during the call, Mulally said he would "be pleased" tofulfill his commitment to stay at Ford until at least the end of2014. Whether he leaves earlier than planned has been thesubject of much debate over the last two months.

He has been considered as a CEO candidate at Microsoft Corp, Ford's partner on its Sync and MyFord Touch vehicleinfotainment systems.

During the call, Mulally declined to say whether he has beenin touch with Microsoft about the job. Microsoft CEO SteveBallmer said in August he plans to retire within 12 months.

Ford shares rose 1.3 percent to $17.75 in mid-day trading onthe New York Stock Exchange. They hit a session high of $18, thebest since late January 2011.


The third quarter marked the first time in more than twoyears that Ford reported a combined profit in its three overseasoperations: Asia Pacific and Africa, Europe and South America.

Ford narrowed its losses in Europe to $228 million in thequarter from $468 million a year ago. The performance trouncedWall Street estimates of losses exceeding $400 million.

In South America, the automaker had a pretax profit of $159million, up sharply from $9 million last year. In Asia Pacificand Africa, Ford earned $126 million, nearly triple last year.

During the first nine months of 2013, Ford lost $1 billionin Europe and spent $400 million to restructure thoseoperations. Ford closed two U.K. factories in July and plans toshutter its plant in Genk, Belgium, by the end of next year.

Ford's vehicle prices stabilized in Europe in the thirdquarter and overall auto sales in Europe may see "very, verymodest growth" in the near term, Shanks said.

Still, the broader European recovery remains patchy, withsome Ford rivals reporting lower vehicle prices, Shanks said.French carmaker Renault reported a 3.2 percent drop inthird-quarter revenue on Thursday, while Daimler raised itsfourth-quarter profit outlook.

Morgan Stanley analyst Adam Jonas projected that Ford wouldreach near-breakeven in Europe next year. As a result, analystsmay boost their 2014 earnings-per-share outlook - now currentlyat $1.79 - to $2.00 or more, he said in a research note.

Ford reported a North American pretax profit of $2.3 billionin the quarter, little changed from last year, despite strongersales of pickup trucks. North American margins were 10.6 percentin the quarter, roughly on par with 10.7 percent during thefirst nine months of the year.

Ford executives said during the call that the margins werepinched in the quarter because Ford spent more on engineering.The automaker also faced higher compensation costs and sold morecars and small utilities like the Fusion mid-size sedan thathave lower margins than pickup trucks.

During the third quarter, F-Series truck sales rose 18.1percent, according to Kelley Blue Book. The F-series trucks andSUV derivatives such as the Expedition account for more than 90percent of Ford's global profit, according to Morgan Stanley.

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