DEARBORN, Mich. -- Ford Motor Company said its second-quarter profit dropped nearly 60 percent on slower sales and wider losses in its troubled European operations. þþþFord said it earned $1 billion in the quarter compared to $2.4 billion in the same period last year. While its core North American business continued to perform well, it reported a loss of $404 million in Europe. þþThe automaker now expects to lose more than $1 billion in Europe this year, as increasingly worse sales there drag down what is otherwise a turnaround. þþ“The magnitude of this loss will be affected by a number of factors, including the overall economic environment, competitive actions, and Ford’s response to those developments.” þþEuropean car sales have fallen to their lowest level in a decade, and most automakers are struggling with overcapacity there. Ford said the region’s problems are “more structural than cyclical” and will not improve any time soon. þþFord’s chief financial officer, Robert Shanks, called the deteriorating market conditions in Europe “very, very serious.” þþThe company will cut production of vehicles in the third quarter in Europe, lay off temporary workers and slow the speed of its assembly lines, Mr. Shanks said at a press briefing at Ford headquarters. þþBut Ford is not ready to make major structural moves, such as closing a plant or cutting full-time workers in Europe. Mr. Shanks said management is considering longer-term plans “to address the situation.” þþThe bleak performance in Europe overshadowed Ford’s strong performance in North America, where it reported a $2 billion operating profit. þþFord also struggled in South America, where it made just $5 million in the quarter compared to $267 million in the same period in 2011. The company lost $66 million in Asia after earning $1 million in last year’s second quarter. þþOverall, Ford’s global revenue was $33.3 billion in the quarter, down slightly from $35.5 billion a year ago. The company said it ended the period with $33.9 billion in cash and other liquid assets. þþMr. Shanks said Ford had not anticipated such a rapid deterioration in the European market, where its revenue in the quarter fell to $7.1 billion compared to $9 billion a year ago. þþFord expects its market share to fall in the region the rest of the year. Mr. Shanks said the company will adjust production to meet lower demand, bur did not provide details. þþ“We are doing all the plans we have to consider to address the situation in Europe,” he said. þ
Source: NY Times
