Ford Motor Co on January 29 predicted 2013 total operating profit would match results last year as market share gains in the United States offset deepening losses in Europe. Ford said the sales outlook was deteriorating in Europe, and it now expects to lose $2 billion in 2013, worse than the loss of $1.75 billion in 2012.
By contrast, Ford, the No 2 US automaker, expects to earn more money in North America in 2013. The region was Ford's chief source of strength last year and helped it handily beat Wall Street estimates for the fourth quarter.
"We're likely to see, in the euro zone, a recession for the full year," Chief Financial Officer Bob Shanks told reporters after it reported quarterly results.
"Clearly we still have some difficult times in front of us (in Europe)," Shanks said. "But we do think it will probably bottom this year."
Ford reported a per-share pretax operating profit of nearly $1.7 billion, or 31 cents in the fourth quarter, better than the average analyst estimate of 25 cents per share, according to Thomson Reuters I/B/E/S. This was also higher than the $1.1 billion, or 20 cents per share, it earned a year earlier.
Ford shares dipped about 1 percent to $13.61 before the market opened.
Fourth-quarter revenue totalled $36.5 billion.
Ford earned nearly $1.9 billion in North America in the quarter, almost $1 billion better than the fourth quarter of 2011. It lost $732 million in Europe, much worse than the $190 million loss it reported a year earlier.
The improved North American performance reflected efforts by Alan Mulally, hired as chief executive in 2006, to steer a turnaround.
Ford avoided government bailouts needed by rivals General Motors Co and Chrysler Group LLC in 2009.
Jefferies analyst Peter Nesvold estimated Ford cut capacity in North America by a little more than one-fifth from 2006 to 2009. Higher vehicle prices commanded an additional $10 billion in revenues from 2006 to 2010, Nesvold said.
The North American turnaround will serve as a blueprint for Ford's restructuring in Europe. Ford plans to close three factories and reduce capacity in Europe by 18 percent to save as much as $500 million a year.
But the region remains unpredictable, Ford said, adding that it would take more action if necessary. Ford had expected 2013 losses there to match 2012 levels.
Instead, Ford now expects to lose more than $200 million more in Europe in 2013. The estimate is also affected by a lower interest rate, which increases the automaker's pension costs, and a stronger euro.
The $2 billion loss estimate for 2013 includes about "half a billion dollars" in restructuring costs, Shanks said. "We view that as an investment in the future."
Ford expects to command a higher market share in both the United States and China this year. The company also looks to break even in Asia and South America this year.
The company spent $1.2 billion on lump-sum pension buyouts last year, but did not provide an estimate for how many salaried retirees took the offer.