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

In South America, where Ford made $54 million in the first quarter of 2012, the company has already forecast a first-quarter loss of about $300 million. The problems are largely external: Weakening local currencies, inflation pressures, and stepped-up competition from market newcomers will all weigh on Ford Motor Company (NYSE:F), as Ford Americas President Joe Hinrichs told analysts last week. Ford still expects to break even in South America in 2013, but the near-term results could be challenging.

It’s a much happier story in Asia, but not necessarily a more profitable one. Ford’s sales in China through the first two months of 2013 were up a whopping 46%, as the Focus and Escape — known as the Kuga overseas — have proved quite popular with Chinese consumers.

But profits from those sales are likely to be offset by the continuing investments that Ford is making in the region. Ford expects Asia — and especially China — to be a major source of profit growth in the second half of the decade. The company is investing heavily now to build a base for that growth later on, and management has said it expects its Asian operation to break even in 2013.

The upshot: a solid quarter, despite challenges
Long story short, while North America could be substantially more profitable than it was a year ago, challenges (and investments) in Ford’s other regions are likely to eat up much of the gains. I think it’s likely that Ford Motor Company (NYSE:F) will outpace the $1.4 billion profit it posted in the first quarter of 2012 but probably won’t approach the $2.55 billion it reported in the first quarter of 2011.

That doesn’t mean shareholders should be worried. Steady progress in Europe and Asia has Ford solidly on track to post significant bottom-line gains in a couple of years — gains that should do very good things for the Blue Oval’s stock price.

The article Ford’s Q1 Earnings: An Early Preview originally appeared on Fool.com is written by John Rosevear.

Fool contributor John Rosevear owns shares of Ford. Follow him on Twitter at @jrosevear. The Motley Fool recommends and owns shares of Ford.

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