Ford Motor Company (F): This Company’s Q1 Earnings: An Early Preview

What should we expect when Ford Motor Company (NYSE:F) reports earnings later this month?

One thing seems a safe bet: Ford will post a solid profit. But how will it compare with last year’s? And how will the various challenges that Ford has been facing around the world affect the Blue Oval’s bottom line?

The engine of Ford’s global profits
Ford Motor Company (NYSE:F)’s North American unit is the “engine” of the company’s business, as CEO Alan Mulally often says. With many European nations facing deep recessions, an aggressive effort by Ford to invest for expansion in Asia, and now increasing signs of challenges to Ford’s bottom line in South America (more on that in a moment), it’ll be up to North America to post a strong performance to power Ford’s bottom line.

Fortunately, the signs have been pretty good on that front. Ford’s U.S. sales made steady gains during the quarter, up 22% in January, 9% in February, and 6% in March, even as the overall U.S. auto market showed signs of cooling off.

More importantly for Ford Motor Company (NYSE:F)’s bottom line, full-sized pickup sales have been strong. Ford’s F-Series lineup had its best first-quarter sales total since 2007, as a slowly improving U.S. economy led to an upturn in pickup purchases across the industry.

That’s really important. Ford sells a huge number of F-Series pickups every month — 67,513 in March alone. Not only are the volumes high, but pickups are high-margin products as well. That means they contribute disproportionately to Ford’s bottom line in North America.

Fortunately, it looks as if that contribution was a hefty one in the first quarter. That bodes very well for the company’s first-quarter result in North America, which should compare well with the $2.1 billion result it posted in the first quarter of 2012.

But the picture elsewhere in the world is a less cheery one.

Trouble in Europe and South America
In Europe, where Ford is the No. 2 automaker after Volkswagen AG (ADR) (PINK:VLKAY), steep recessions in many countries have pummeled new-car sales. Ford Motor Company (NYSE:F) has been hammered more than most in the past few months, as the company’s reluctance to match rivals’ deep discounts has cost it quite a few sales.

Ford has a comprehensive turnaround plan in progress for Europe, but it still expects to lose as much as $2 billion in the region in 2013. It’s likely that first-quarter losses will be much greater than the $149 million it lost in Europe in the year-ago quarter, perhaps $500 million or more.