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By Mike Caggeso
Ford Motor Co. (F) surprised analysts with a $100 million in first-quarter profit, or 5 cents a share – the result of increased sales overseas and 4,200 job cuts in North America.
Analysts had forecast a loss, as Ford posted a $282 million loss a year earlier and a $2.7 billion net loss for full-year 2007.
Chief Executive Officer Alan Mulally aggressively cut costs by $1.7 billion, including $1.2 billion in North America.
Ford further cemented its earnings with impressive international sales numbers and news, including:
- Pre-tax profits soared 237% in Europe (from $219 million to $739 million)
- Pre-tax profits went up 127% in South America (from $113 million to $257 million).
- Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.
- Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It'll be "sold in virtually all of our major worldwide markets by 2010."
While Ford lost $45 million in pre-tax profits, that number is a significant improvement from last year's $613 million loss.
"Particularly impressive was the continued strength in Europe," Calyon Securities analyst Mark Warnsman said in a research note, Reuters reported. "The outstanding result in Europe would have meant little, however, if North America had not pulled itself back to close to breakeven."
The Dearborn, MI-based company, posted negative revenue gains in North America and Asia – two key markets where it cannot afford to lose market share.
However, Mulally trumpeted Ford's international sales, which he sees as an indication of future profits. "We remain committed to our key business objectives, including our goal of reaching North America and overall automotive profitability in 2009 despite the challenging economic conditions," he said.
The company could make even more progress in the second quarter, because it won't have to worry about a one-time $416 million charge that reflected money Ford spent just to reduce expenses. Also the company expects to close its $2.3 billion sale of the Jaguar and Land Rover brands to Tata Motors Ltd. (TTM) in the next three months.
All totaled, Ford has cut 46,300 jobs in North America in the past two years, Reuters reported. And last year, it negotiated a new contract the United Auto Workers union.
"In the face of strong headwinds, it looks like the turnaround is taking hold," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, told Bloomberg.
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