Ford Motor Co.’s strong North American profits will net record profit-sharing checks of $8,300 on average for 45,800 hourly workers, to be paid March 14. The news flows from positive fourth-quarter and full-year earnings released Tuesday that exceeded Wall Street’s expectations.
Ford reported its highest fourth-quarter pre-tax profit since the same period in 1999 at $1.7 billion or 31 cents per share, beating analyst expectations of 25 cents per share. Net income for the quarter was $1.6 billion despite losses in Europe of $732 million. Revenue was $36.5 billion, up from $34.6 billion a year ago.
And full-year pre-tax profit of $8 billion, driven by $1.9 billion from North America, contributed to total 2012 net income of $5.7 billion, or $1.41 per share, beating the average of analyst estimates of $1.34 per share. A year ago, full-year operating profit was $8.8 billion.
That compares with net income of $20.2 billion in 2011 – the most profitable year since 1998 – but most was driven by an accounting adjustment showing a one-time, non-cash gain of $12.4 billion.
CEO Alan Mulally had warned that Ford would not match 2011 profits or market share in North America and Europe.
North America made more but Europe’s losses were also greater, resulting in pre-tax profit of $8 billion for the year, down from $8.8 billion in 2011.
Company guidance is that North America will see gains in both profit and share in 2013 with stronger pickup demand and a full-year of Escape and Fusion sales. Operating profit should be about 10 percent, similar to 2012’s 10.4 percent.
Ford has said it wants to achieve profit margins of up to 10 percent in North America over the long term and impressed investors in the third quarter with a 12 percent margin. That fell to 8.4 percent in the fourth quarter.
North America’s strength will offset bigger losses of about $2 billion projected for Europe this year as the market is expected to hit bottom and is showing signs it is stabilizing.
The year ahead also will come with higher health care costs, in part due to higher amortization costs. And Ford will address its pension fund, which is underfunded by $18.7 billion compared with $15 billion a year ago. Ford plans to contribute $5 billion to the pension fund this year, of which $3.4 billion is discretionary. The pension fund will be fully funded by mid-decade.
Overall, Ford is calling for profits in 2013 to be the same as in 2012.
The resulting profit sharing for workers exceeds the average of $6,200 for 2011, which was paid in two installments.
Ford shares fell 64 cents, or 4.64 percent, to $13.14 on Tuesday.