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Ford, GM hit home runs, despite Euro woes
Detroit auto-makers post solid Q3 profits but Europe to drag down results until 2015
2 Nov 2012
By TERRY MARTIN
LOSSES in Europe have continued to drag down the otherwise strong third-quarter profit results of General Motors and the Ford Motor Company posted this week, although both US auto giants are planning to stem the flow of red ink on the troubled continent by mid-decade.
Chrysler Group, which is controlled by Fiat, has also turned in another solid financial performance based on strong sales in the US, although Fiat has forecast a prolonged downturn in Europe after reporting a €219 million ($A273m) operating loss for the quarter, 61 per cent worse than a year ago.
Europe’s number one, the Volkswagen Group, was also down last quarter, although it turned in a “robust result” in line with expectations and has a generally more positive outlook.
Record results in North America have enabled Ford to post its best-ever third-quarter pre-tax operating profit of $US2.2 billion ($A2.1b), up $200 million on the same period last year and marking a profit for 13 consecutive quarters.
The Blue Oval achieved a record $2.3 billion profit for the quarter in North America – its best result since 2000, when the company began treating the region as a separate business unit – and an improving $45 million in its Asia Pacific and Africa region, which includes China (and Australia).
From top: Chrysler Group CEO Sergio Marchionne Ford president and CEO Alan Mulally GM chairman Dan Akerson.
However, Ford’s pre-tax loss in Europe widened to $468 million, compared with $306 million in Q3 2011.
As GoAuto reported last week, the company is projecting a loss of more than $1.5 billion in Europe for the 2012 calendar year, but a turnaround plan now underway – which includes the closure of production plants in Belgium and the UK – aiming to restore it to profitability in the region by 2015.
Ford president and CEO Alan Mulally said: “While we are facing near-term challenges in Europe, we are fully committed to transforming our business in Europe by moving decisively to match production to demand, improve revenue through new products and a stronger brand, improve our cost efficiencies and take advantage of opportunities to profitably grow our business.”
General Motors, which last week detailed plans for a widespread product-sharing program with PSA Peugeot Citroen, has also now declared that it should break even in Europe by mid-decade, recovering from a continuing downturn that was this week shown in the form of a $478m loss for the region last quarter (widening from $292 million for Q3 last year).
Stand by for further cutbacks from GM in Europe after the company this week estimated a full-year loss of between $1.5 and $1.8 billion on the continent – a figure that will be more than double last year’s $747m loss but will also depend “on the level of restructuring activity in the fourth quarter”.
Europe was blamed for dragging down GM’s otherwise solid quarterly profit, which came in at $1.5 billion – down from $2.2 billion a year ago – and included a $1.8 billion profit in North America and $700m profit for its International Operations division, which includes China, other Asian markets and Australia.
GM chairman and chief executive Dan Akerson said the company would “keep playing offense with growth products like the Chevrolet Onix, Opel Mokka and Cadillac ATS and continue to systematically address business risks”.
The company’s chief financial officer Dan Ammann added: “While we still have a lot of work to do, especially in Europe, it is encouraging to see our results begin to reflect the discipline we are bringing to bear on the overall business.”
Chrysler Group’s net profit for the quarter increased 80 per cent over last year, to $381 million, reflecting ongoing sales increases across the Chrysler, Jeep and Dodge brands.
Chrysler Group and Fiat Group CEO Sergio Marchionne said the company had “changed the conversation” with models such as the all-new Dodge Dart, redesigned Jeep Grand Cherokee and Chrysler 300, and a more fuel-efficient Ram 1500 pick-up.
“We continue to work feverishly and are pleased to see that our all-consuming aspiration for excellence is translating into results,” he said. “We are confirming guidance for the year, and expect ‘free cash flow’ to be well in excess of $1 billion.”
For Europe, however, Mr Marchionne said Fiat has forecast “continuing weak trading conditions for the remainder of 2012, extending well in 2013 and at least part of 2014”.
That is more pessimistic than the Volkswagen Group, which is still turning in strong results, albeit lower than last year.
It recorded a profit of €2.3 billion ($A2.9b) for the third quarter, down 19 per cent on Q3 2011, but for the first three quarters combined its profit is only 1.6 per cent in arrears, at €8.8 billion.
“Although the times aren’t easy, it’s up to us to systematically continue along our chosen path – the right path,” said VW chairman Martin Winterkorn.
“We therefore remain committed to our ambitious goals for 2012, despite growing headwinds.
“The Volkswagen Group is well positioned thanks to its 12 strong brands, young and attractive product portfolio, growing presence in all major regions of the world and flexible production. All of these factors also represent the basis for our commitment to our … goals.”
These include increasing vehicle sales over last year’s 8.27 million and maintaining its full-year profit level of €15.4 billion achieved in 2011, which was more than double the result (€6.8b) from the year before.
VW Group CFO Hans Dieter Poetsch said: “We have always said that the second half of the year would be more difficult, so our performance is in line with expectations. We have achieved a robust result.
“We have a broad global positioning and our strong financial basis is practically unrivalled. Our relative strength compared with the competition shows that we are on the right path.”
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