Last week, Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) both posted solid Q2 earnings on the back of their strongest region, North America. The seasonally adjusted annual rate, or SAAR, has improved steadily, boosting sales across the industry and especially in full-size pickups.
On the back of the F-Series, which saw a sales increase of 22% this year, Ford Motor Company (NYSE:F) posted record pre-tax profits in North America — pretty impressive for a company that totaled more than $30 billion in losses between 2006 and 2008. With all the good news here at home and everything else in the earnings report, it’s easy to miss bright spots overseas — namely Europe and Asia/Pacific/Africa. Here are the some of the finer details, and why it matters to Ford Motor Company (NYSE:F) investors.
Gloom and doom coming from Europe, which is well deserved, has been a massive overhang on Ford’s share price for the past year or two, as losses came in the billions. Headline after headline pointed that out, and it was a drain on Ford’s bottom line — but that looks to be turning around.
Ford Motor Company (NYSE:F)’s pre-tax results in Europe rang in $56 million better than a year ago and a sharp $114 million better than last quarter. While Ford took advantage of an improving SAAR here in North America, it would have no such luck overseas, as the SAAR in Europe declined from 14.4 million to 13.6 million.
Even with the declining SAAR, Ford managed to improve its wholesale volume and revenue both by about 8%. Between that and an increase in market share, Ford was able to partially offset the lower industry sales for a much improved loss of $348 million in the second quarter.
Its reduction of losses was enough for Ford Motor Company (NYSE:F) executives to trim down its year-end estimate from $2 billion to $1.8 billion. There’s even an off chance that Ford’s losses will end up better than the $1.8 billion estimate, and only $810 million has been lost for the first half of 2013. Management is still holding firm on its goal to be profitable in the region by 2015, and it seems that Ford’s losses are reducing ahead of the industry curve — great news for investors.
While fixing Europe’s woes will contribute nearly $1.8 billion in bottom line profits, growth in Asia could represent even more in the years to come.
The Asia/Pacific/Africa region was easy to miss, with focus on North America and Europe, but the One Ford Motor Company (NYSE:F) plan is taking hold here, as the region reported its best-ever quarterly result in last week’s conference call. It improved over last year’s loss of $66 million to a pre-tax profit of $177 million. Its operating margin jumped 8.7 percentage points from a year ago as well, an impressive turnaround.