Ford Motor Co said on Thursday that its losses on international operations could hit US$570 million in the quarter ending this week, but would not be enough to offset profits from domestic sales.
In a filing with the US Securities and Exchange Commission, the No. 2 US automaker said it expects second-quarter pre-tax operating profits, excluding special items, “to be substantially lower than the same period a year ago.”
“We continue to expect good results for Ford North America and Ford Credit during the second quarter, but our operations outside of North America are under increasing pressure,” the statement said.
“In fact, our combined results for the second quarter for Ford South America, Ford Europe, and Ford Asia Pacific Africa could be a loss of about three times as much as the US$190 million pre-tax loss incurred by these operations in the first quarter,” it added.
The company said it was running into greater competition and pricing challenges as well as weakening currencies in South America.
Europe’s turn into recession has hit sales there, biting into its margins, Ford said.
“We are impacted by the serious economic crisis, compounded by an intensifying competitive environment as manufacturers react to lower consumer demand and excess production capacity,” it added.
In its Asia-Pacific, Africa division operations are better, but Ford said it was “not yet fully realizing the associated revenue of new products and facilities.”
“While our volume is up in the region, our investment and growth costs are rising faster for now. For the full year, we continue to expect to be solidly profitable,” it added.
Separately, Chrysler’s top sales executive said US auto sales will slow a bit this month from the pace earlier this year, but he expects a rebound in the second half of the year.
Reid Bigland, head of sales for Chrysler and chief executive officer of Dodge, also expects a strong June for his company, with an increase of around 18 percent as long as Chrysler does well in the final days of the month. All automakers report US sales for this month on July 3.
Auto sales have been a bright spot in the economy. They were running at an annual pace of around 14.5 million from January through April. However, last month, the rate slowed to 13.8 million, which companies and analysts blamed on a slight rise in unemployment, stock market gyrations and falling consumer confidence. Many analysts predict this month’s sales will come in at an annual pace below 14 million for the second straight month.