Ford grows above projections and profit reaches $ 1.2 billion

The display of Ford's financial strength yesterday, showed that sell cars continues to be a growing activity, despite the instability of the world economy. Ford's results in the second quarter exceeded most Wall Street forecasts, with high revenues of 15% compared to the same period in 2012 and net income rising to $ 1.23 billion. The automaker raised its annual profit forecast, benefited by the decrease of prejudice in Europe and high profit in Asia and South America.
Performance excelled in a quarter where the average growth projection of the revenue of the 500 largest publicly traded companies of the United States is only 1.6%. This low growth reflects the still-modest recovery pace in the USA, the persistence of bad economic situation in Europe, the cooling of China and India and the uneven results in South America.
The demand for new cars and trucks, on the other hand, has been growing more, at least for now, and driving the Ford and other automakers.
"This is a growth industry. Grows 5 percent a year, more than the growth of the gross domestic product (GDP) of 2.5% to 3%, said Ford Chief Executive Alan Mulally, in an interview yesterday. Despite the short-term concerns with the downturn in demand in Russia and China, Mulally provides that these markets will continue expanding in the long run.
World production of cars and light trucks must reach 100 million vehicles in 2015, compared to the current, 80 million, according to the market research firm IHS Automotive.
In the United States, the automakers have been outperforming the overall performance of the economy a few years ago. Car production was responsible for almost 20% of the u.s. GDP growth since the second quarter of 2009, Monday to Ford Chief Economist Ellen Hughes-Cromwick,.
Executives in the industry say is confident that sales will continue to rise in China, India, Russia and other emerging countries, despite the short-term signs of slowing in these markets. There are 50 countries where GDP per capita car ownership rates and relatively low indicate strong potential for expansion, according to Ellen.
Ford is not the only automaker to design increase in world demand. The Chief Executive of German luxury car maker Daimler said yesterday that provides increased between 2% and 4% in worldwide sales of cars this year, thanks to continued advancement in the USA and the "continuity of significant expansion in the Chinese market".
The success of Ford has been sustained for a strategic shift started when Mulally took the helm of the company in 2006. During most of the 90 years and the beginning of 2000, the Ford focus was making SUVs and pickup trucks of high profit margin in the USA, leaving large gaps in its main product lines in Europe and Asia.
Mulally has approved a multiyear plan to have a "family" of vehicles in major markets-competing for sales and revenue in the segments in which Ford previously had no presence. That decision "opened another opportunity for us," according to Mulally.
In Europe, where the overall market should shrink for the sixth year, Ford earned participation and interrupted the fall of sales, thanks to new models like the Kuga sport utility, and to small vehicles, including a van for commercial use, a micro-minivan and a sport utility factor-all derived from the basic design of the subcompact Fiesta.
Ford's success is supported by a strategic shift started when Mulally took over in 2006
In Europe, Ford is losing money, but the injury, before taxes shrank in the second quarter to $ 348 million, compared to $ 404 million obtained in the same period in 2012. "The improvement in Europe was incredibly encouraging," says the Chief Financial Officer of Ford, Bob Shanks.
The Kuga sport utility, known as Escape in North America, illustrates how Ford's strategy worked. Ford manufactured the Kuga in Europe, based on a European design, and sold a larger version, under the name Escape.
Over the past 12 months, Ford has released new versions of the Escape and Kuga virtually identical. This year, for the first time, the Kuga went on sale in China, where the demand for SUVs is strong.
In the USA, Ford found himself in a position to raise the average price of new exhaust at $ 1 mil. The launch of the Kuga in China further strengthened Ford's revenue. "Our revenue growth is pulled by the range of products," said the world Director of sales and marketing, Jim Farley.
A broader line of cars and light commercial is helping boost Ford's revenue in a more accelerated than the market as a whole, says Mulally.
"We live in a perfect point of inflection, in which all divisions worldwide have improved in terms of revenue and margin aspect," said Mulally. Ford's goal is to carry out a third of its sales in North America, one-third in the Asia-Pacific region and a third in Europe, he says.
Ford is not alone in strive to make their vehicles around the world more like the platform, to save more from economies of scale. However, Ford hit the nail on the head in your style and design in its decision to increase fuel efficiency through the use of small engines, turbo, in order to offer consumers more savings without sacrificing performance.
In the United States, Ford had success with "EcoBoost" of its pickup sales champion F-150, which replaces the traditional V-8 engine by a 6-cylinder turbo engine developed by Ford as offering more traction power that the eight-cylinder competitors models. In part because the EcoBoost F-150 cost more, the average sales price by Ford for their pickup trucks exceeds by about $ 4 thousand of Silverado, GM competitor, according to GM officials.
Ford is experiencing great success today, but still has challenges ahead, including overcoming a legacy of good results that gave rise, in the past, the inept management.
The Lincoln luxury brand of Ford has little presence in the United States and has just started which, according to Farley, will be a long process of reconstruction.
The automaker still relies heavily on operations in North America, which produced a profit before taxes of $ 2.33 billion in the second quarter, compared to $ 2.01 billion from the same period last year. In South America the profit was $ 151 million, compared to $ 5 million from the same quarter of 2012.
Ford will close three production units in Western Europe, including two in the United Kingdom, which will operate this week. The automaker begins to get a return on their investment in Asia to achieve the competitors GM, Volkswagen and Hyundai.
Second-quarter profits computed by Ford in Asia rose to $ 177 million, reversing the $ 66 million recorded in the region in the second quarter of last year. Sales in China, which accounts for the bulk of Asian market, made a jump from 47% in the first half of the year, to 407,721 vehicles.
Mulally says that Ford should be able to sustain a growth rate of 15% per annum in future cash flow discounted to present value. The key to achieve this, he says, will be "very disciplined in combining the production with the demand".
Ford has built seven new Assembly units in China in recent years, and is being built once, according to an investment plan of $ 5 billion. But in North America, Ford increased the number of shifts to raise production in its units already operating, instead of building new units.