But that said, there are some reasons for optimism. Last fall, Ford unveiled a comprehensive turnaround plan that’s expected to return Europe to breakeven by the end of 2015. Ford still has much to do – there are three factories slated to close, and more changes coming — but there are some signs that the plan is already bearing fruit.
The refreshed Fiesta is one of Europe’s best-sellers. Photo credit: Ford.
After months of declines, Ford’s sales in Europe were actually up last month, and the company is gaining market share thanks to some strong new models. It has also rolled back low-profit sales to rental-car fleets, which should also help margins.
Long story short, expect a loss -= but don’t be too surprised if Ford’s loss in Europe narrows, just as General Motors (NYSE:GM)‘ did last quarter.
Asia-Pacific-Africa
This is Ford’s catch-all region, covering China as well as India, Southeast Asia, Africa, and the Middle East. The region has been just breaking even — profits were just $1 million in the year-ago quarter, and $6 million in the first quarter of 2013. But that’s not a bad thing: Income in this region is being plowed back into a massive expansion effort in India and China, where Ford is making a big bid to become a major player over the next few years.
The Ford Kuga, China’s version of the Escape, has sold very well since its launch. Photo credit: Ford.
Ford’s growth in China has been tremendous: Sales are up over 40% so far this year, as Ford continues rolling out its global product line to a very receptive Chinese audience. Already the Ford Focus is one of China’s best-sellers, and the Kuga — Ford’s Escape SUV, tweaked for the Chinese market — has been a strong seller since its debut earlier this year.
Long story short: Expect another break-even quarter, but that’s not a bad thing.
Ford Credit
The credit arm’s profits ebb and flow with the leasing market. It earned $438 million before taxes in the year ago quarter and $507 million in the first quarter of 2013. A profit in that general range is likely again this quarter.
The upshot: A good number is likely
So North America has continued to be strong, South America should be less of a drag, and there are early signs of improvement in Europe: Will Ford beat last quarter’s $1.6 billion net profit?
Not necessarily. The company’s spending on upcoming new products may well be higher this quarter than it was last quarter. But Ford’s second-quarter profit is likely to be in the same neighborhood as last quarter’s, and probably ahead of Wall Street’s estimate. That should be a good thing for Ford’s stock price.
The article Ford’s Second-Quarter Earnings: A Preview originally appeared on Fool.com and is written by John Rosevear.
Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors and owns shares of Ford.
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