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Ford still in the black but Q1 profits weaken

Profit and loss: Ford is not doing so well in its European or Asia Pacific and Africa regions, but promising performance in North America is keeping the Blue Oval in the black.

North America cushions Ford in Q1 as Chrysler keeps Fiat in the black

Ford logo1 May 2012

FORD has recorded its eleventh consecutive quarter in the black, but its operating profit for Q1 was down 19.1 per cent to $US2.3bn ($A2.2bn) compared with the same time last year due to losses made in Europe, Asia Pacific and Africa.

Fiat Group reported a first quarter net profit of $US501.5m, but with Chrysler’s contribution excluded it would have only broken even, down from a trading profit of $US332.3m for the same period in 2011, dragged down by losses in Europe, the Middle East and Africa (EMEA).

Volkswagen Group, Hyundai-Kia and Daimler all reported increased profits, while General Motors, Nissan and BMW are yet to post their Q1 results.

French outfits PSA Peugeot-Citroen and Renault have not issued profit figures, but experienced drops in revenue of 7.0 and 8.6 per cent respectively, affected by slow sales in their European home markets.

Ford’s North American pre-tax profits were up 16 per cent to $US2.1bn, the highest figure since it began counting North America as a separate business unit in 2000.

Not so good was a $US149m loss in Europe, compared with a $239m profit in Q1 2011, due to lower demand for vehicles, parts and accessories, plus action taken to reduce dealer inventories.

Ford’s Asia Pacific and Africa division reported a $US95m loss (down from a $US33m profit), which Ford says was exacerbated by a later launch of the Ranger one-tonner in Thailand and South Africa due to the Thai floods, while ‘Other Automotive’ reduced losses from $US249m to $US106m due to lower interest payments and the absence of market valuation losses associated with its investment in Mazda.

Profits in South America were down from $US210m a year ago to $US54m due to unfavourable exchange rates and higher costs, despite a $US100m increase in revenue to $US2.4bn.

Ford’s automotive division paid off $US2.9bn of debt, improving its cash position against debts by $US4.6bn compared with a year ago and putting it in the black to the tune of $US9.3bn.

Fiat Group’s net profit increased 923.7 per cent in Q1 because it did not have Chrysler’s contribution last year.

However, one indication of its progress was a trading profit of $US1.15bn that was $US133.7m higher than the fourth quarter of 2011 despite Q1 being traditionally slower.

Losses in EMEA worsened from $US87.4m to $US225m but were offset by the increased earnings in North America and Asia Pacific – and Fiat was quick to acknowledge Chrysler’s contribution to its continuing profitability.

Following record profits in 2011, Volkswagen Group’s upward march continued in Q1 as the German giant reported a $US4.2bn operating profit (up 10.2 per cent) on revenues that rose 26.3 per cent to $US62.6bn.

The group’s share of the global passenger-car market now stands at 12.2 per cent, up from 11.9 per cent this time last year, having sold 2.3 million cars worldwide in Q1.

Despite the expense of developing its new MQB vehicle platform, the Volkswagen brand raked in an operating profit of $US1.46bn (up 5.3 per cent) while Audi contributed $US1.85bn (up 26.6 per cent) despite selling less than one-third the number of vehicles.

Skoda sales increased 13.9 per cent, resulting in an 11.8 per cent increase in profit to $US277m, while Seat sales increased 6.7 per cent but losses were 142 per cent higher at $US38.4m.

Bentley doubled its Q1 sales to 2000 units, taking it from a $US38.4m loss to a $US19.9m profit, while VW’s commercial vehicle division grew sales by 9.8 per cent, with operating profit up 34.1 per cent to $US164.2m.

Daimler reported a 20 per cent rise in net profit to $US1.87bn on revenues up 9.2 per cent to $US35.7bn.

Both its Mercedes-Benz luxury-car business and Daimler Trucks increased sales but returned slightly lower earnings, while Mercedes-Benz Vans sold fewer vehicles but maintained profits.

South Korean duo Hyundai and Kia posted revenue increases in Q1, with Hyundai’s net profit leaping 30.6 per cent to $US2.21bn and Kia up 26 per cent to $US1.06bn.

Hyundai said its strategy of increasing vehicle prices to match their value – a move away from the bargain-basement philosophy that established the brand in many markets – was instrumental in boosting profitability.

Kia posted double-digit growth in the US, Europe and China regions, far exceeding industry averages and compensating for its slower domestic market.

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