Ford Lowers its Outlook
Automotive giant Ford (NYSE: F) reported Tuesday that second-quarter net income had fallen 57 percent thanks to enormous losses in Europe, and that it is lowering its full-year profit outlook.
Benzinga reported Tuesday that Ford was expecting to see profits fall roughly 43 percent and, as expected, the crisis in Europe is slamming the brakes on the company revival that President and CEO Alan Mulally started.
According to the numbers released by Ford, second-quarter pre-tax operating profit came in at $1.8 billion, or 30 cents per share. Net income was $1 billion, or 26 cents per share, which is a huge decrease of $1.4 billion from the second quarter of last year.
Ford admits in the release that Ford Europe and Ford South America have tampered with any chance of a good quarter despite good results from Ford North America and Ford Credit. Ford North America recorded profits of more than $1 billion.
“The Ford team delivered another solid quarter driven by the strength of Ford North America and Ford Credit,” Mulally said. “We remain absolutely committed to continuing to make progress on our One Ford plan, including dealing decisively with near-term challenges, investing for future growth, and developing outstanding products with segment-leading quality, fuel efficiency, safety, smart design and value.”
Meanwhile, CFO Bob Shanks said, "We are reviewing all areas of our business to address the near-term challenges, while ensuring we build a strong foundation for our future. It is premature to discuss details of what our plans may be in response to the situation in Europe, but we will continue to communicate our plans at the appropriate times with all of our stakeholders.”
Benzinga reported on May 23 that Ford's credit rating had been raised from Ba2 to Baa3 by Moody's, the second ratings agency to restore the Detroit car maker's investment grade rating.
The upgrade was particularly significant for the company, as it marked the end of Ford's seven-year period of paying higher junk bond interest rates. Overall, that meant that Ford could reclaim its blue oval logo, as well as billions of dollars worth of other assets that it pledged as collateral on $23.4 billion in loans that it borrowed back in 2006.
"We knew we could get this done," CEO Alan Mulally told reporters. "This is a very exciting day for everybody associated with Ford, our employees, our dealers, our suppliers. It's way up there on the highlight film for sure."
On Wednesday morning, Ford traded at about $9, down roughly 1.2 percent.
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