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Ford second-quarter profits, sales jump

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(Globalpost/GlobalPost)

Ford on Wednesday reported strong second-quarter profit driven by robust sales and growing market share, especially in the US and China.

The second-largest US automaker posted net income of $1.2 billion, up 18.6 percent from a year ago.

Adjusted earnings of 45 cents per share topped Wall Street expectations of 37 cents.

"The company had an outstanding quarter," chief executive Alan Mulally said, noting this was Ford Motor Company's 16th consecutive quarterly profit.

Revenue rose 14 percent to a better-than-expected $38.1 billion.

Ford upped its forecast for 2013 pre-tax profit to be "about equal or higher than" the $8 billion gained last year, Mulally said in a conference call.

While trouble in Europe continues to weigh down results, the automaker said it is making "great progress" in restructuring its European operations and expects the unit to be profitable again by "mid-decade."

Ford is shutting down three European plants to create a "more efficient manufacturing footprint" and expects to spend $1.2 billion on "separation costs," chief financial officer Bob Shanks said.

Some $419 million of that was recorded in the second quarter and another $400 million or so will be spent this year. The remaining $400 million will be recorded at the end of next year when a Belgian plant closes, Shanks said.

"It is a major restructuring. It is in an environment that is not a great environment," Shanks said in the conference call. "But we clearly are on a very good track to deliver the transformation plan that we laid out in October last year."

Ford is growing in Eastern Europe, with "very robust activity" in Russia, and believes that the industry conditions "may have begun to stabilize" in Western Europe, he added.

The European unit, which lost $348 million in the second quarter, down from $404 million in the first quarter, is forecast to post a 2013 loss of $1.8 billion. That would be an improvement from an earlier forecast of a $2 billion loss this year.

Ford's booming North American region more than made up for the losses, posting a record pre-tax profit of $2.3 billion and achieving an operating margin of 10 percent in the second quarter.

Ford attributed the gains to improving overall industry sales, market share gains boosted by "continued discipline in matching production to real demand," and a "lean cost structure even as we invest more in product and capacity for future growth."

The Asia Pacific Africa region had record pre-tax profits of $177 million and Ford's market share jumped one percentage point to 3.6 percent.

The market share expansion was driven by China, where Ford's share improved 1.5 points to a quarterly record of 4.3 percent on the back of strong sales of the new Focus, Kuga and EcoSport.

Ford's South American unit returned to a profit, earning $151 million in the second quarter after significant exchange-rate related losses in the first quarter following the devaluation of the Venezuelan Bolivar.

Investors welcomed the results, driving Ford shares up 2.9 percent in afternoon trade in New York.

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http://www.globalpost.com/dispatch/news/afp/130724/ford-second-quarter-profits-sales-jump-0