Automaker Ford Motor Co. (F) on Friday reported a profit for the fourth quarter that soared from last year, boosted by a one-time tax gain and higher revenues. However, operating earnings declined from a year ago and missed analysts' expectations, reflecting operating losses in Europe and Asia.
For 2011 as a whole, Ford posted its third consecutive annual profit under Chief Executive Officer Alan Mulally and the company's best ever since 1998. The company's shares are down 5 percent in pre-market.
Ford's fourth-quarter net income soared to $13.62 billion or $3.40 per share from $190 million or $0.05 per share in the year-ago period. The financial services arm Ford Motor Credit Co. LLC's net income rose to $611 million from $367 million last year.
Ford's results for the quarter include a one-time, non-cash special item of $12.4 billion for the elimination of a tax reserve, known as a valuation allowance, and $401 million related to the sale of Ford's Russian operations to the newly created FordSollers joint venture, which began operations on October 1, 2011.
Ford created the valuation allowance in late 2006, reflecting large cumulative losses incurred and on the possibility that the company might not return to profitability within a certain period. However, Ford does not need the reserve now as it has now been profitable for three straight years.
Excluding special items, operating earnings declined to $797 million or $0.20 per share from $1.20 billion or $0.30 per share last year. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.25 per share. Analysts' estimates typically exclude special items.
The company reported pre-tax operating losses for Europe and Asia Pacific Africa regions, citing higher material costs stemming from commodity cost inflation, lower subsidiary profits, the impact of the Thailand flooding and costs associated with investments, among others.
Revenues rose 6.5 percent to $34.6 billion from $32.5 billion in the year-ago period, while automotive revenues grew 16 percent to $32.6 billion. Analysts had a consensus estimate of $32.09 billion.
Ford's vehicle wholesales for the quarter rose almost 3 percent to 1.43 million units from 1.39 million units. Higher wholesales in North America were offset by lower wholesales in South America, Europe and Asia Pacific Africa, the company said.
Meanwhile, fourth-quarter revenues from Ford Motor Credit declined to $2.02 billion from $2.23 billion a year ago.
Ford generated positive automotive operating-related cash flow of $700 million in the quarter, down from $1 billion in the year-ago period. The company's total automotive debt was $13.1 billion as of December 31, 2011, down from $19.1 billion a year ago.
Ford said it will make profit sharing payments to about 41,600 eligible U.S. hourly employees as a result of its 2011 financial performance. For the second half of 2011, the formula in the UAW-Ford collective bargaining agreement generated about $2,450 per employee, which Ford plans to distribute in March.
For fiscal year 2011, Ford's net income soared to $20.21 billion or $4.94 per share from $6.56 billion or $1.66 per share last year.
Excluding one-time special items, operating earnings declined to $6.12 billion or $1.51 per share from $7.58 billion or $1.91 per share last year. Analysts expected earnings of $1.84 per share.
Revenue rose 12.7 percent to $136.3 billion from $120.9 billion in the prior year. Automotive revenues grew to $128.2 billion from $111.2 billion a year ago. Analysts expected revenues of $127.07 billion.
Ford's vehicle wholesales for the year were 5.70 million units, up from 5.31 million units last year.
For fiscal year 2012, Ford expects automotive pre-tax operating profit to improve from 2011, while total company pre-tax operating profit is expected to be about equal to the prior year.
The company also expects Ford Credit to be "solidly profitable", although at a lower level than 2011.
Ford projects U.S. full-year industry volume in a range of 13.5 million to 14.5 million vehicles.
F closed Thursday's trading at $12.79. In Friday's pre-market, the stock is down $0.64 or 5.00 percent to $12.15.
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