Ford sees smaller 2012 profit; eyes $1 billion loss in Europe

Wed Jul 25, 2012 10:42am EDT
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By Deepa Seetharaman and Bernie Woodall

(Reuters) - Ford Motor Co (F.N: Quote) forecast a smaller operating profit for 2012 compared with last year, due in part to wider losses in Europe, where the automaker expects to lose more than $1 billion as the deepening economic crisis hits auto sales.

Ford, which also posted a better-than-expected second-quarter profit Wednesday, said profits in North America and at Ford's finance arm, Ford Motor Credit, would offset losses in Europe and Asia and reduce profits in South America this year.

The No. 2 U.S. automaker's new outlook for Europe falls in line with most Wall Street estimates and is nearly double its previous forecast for an annual loss between $500 million and $600 million.

But some analysts warned that Europe could deteriorate further. During the first six months of 2012, European auto sales fell to their lowest level in nearly 20 years.

"I'm certain Ford is underestimating the situation there, but I think everyone is," Guggenheim Securities analyst Matthew Stover said. "We haven't seen the worst yet."

Chief Executive Alan Mulally said during a call with analysts that Ford is reviewing all aspects of its business in Europe, but declined to provide details about any efforts to reduce capacity.

Ford earlier said its pretax profit would be on par with the levels seen in 2011, when it earned $8.8 billion. In addition to steeper losses in Europe, Ford also expects profits in South America to be "substantially lower" this year.

Concerns over Europe have hit shares of Ford and its larger crosstown rival General Motors Co (GM.N: Quote). Ford stock fell more than 1 percent to as low as $8.92, on the New York Stock Exchange on Wednesday.   Continued...

Men talk at the Ford exhibition as they attend the Washington Auto Show in this file photo taken January 27, 2012. REUTERS/Kevin Lamarque/Files