Ford sees $2 billion loss, slumping sales in Europe

Tue Jan 29, 2013 1:49pm EST
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By Deepa Seetharaman and Paul Lienert

DETROIT (Reuters) - Ford Motor Co forecast a $2 billion loss in Europe this year, pointing to a punishing recession that could drive down industry sales in the region to a 20-year low.

By contrast, Ford expects to make more money this year in North America, its most profitable region. But the No. 2 U.S. automaker also predicted 10-percent operating margins in North America, smaller than the 10.4 percent reported last year.

The weak outlook overshadowed Ford's better-than-expected fourth-quarter results, and sent the company's shares tumbling as much as 6.5 percent. At the stock's low point, the declines wiped away more than $3 billion in market value.

The forecast "undercuts the popular investor thesis that Ford offers significant earnings expansion from a booming U.S. auto market while having 'Europe-proofed' its guidance," Barclays Capital analyst Brian Johnson said in a research note.

It was the fourth time in 12 months Ford ratcheted down expectations in Europe, illustrating how difficult it has been for automakers to predict and manage the rapid deterioration of sales in the region.

Ford expects the industry to sell between 13 million and 13.5 million vehicles in Europe this year. At the bottom of that range, sales in Europe would sink to their lowest level since 1993, according to automotive consultancy IHS Automotive.

"We're likely to see, in the euro zone, a recession for the full year," Chief Financial Officer Bob Shanks told reporters.

"Clearly, we still have some difficult times in front of us," Shanks said of Europe. "But we do think it will probably bottom this year."   Continued...

A logo of a Ford car is pictured during a press presentation prior to the Essen Motor Show in Essen November 30, 2012. REUTERS/Ina Fassbender