european auto

European Cloud Over Ford

On Tuesday, Ford, the second-biggest American automaker, behind General Motors, startled the industry again by predicting that Europe, a critical market, would get worse before it begins improving later this year.

Ford said European auto sales, including commercial vehicles, could fall as low as 13 million this year, and its own annual losses in the region could reach $2 billion. Europe is Ford’s second-largest market, after North America.

“The industry did 14 million last year, and that was the worst in 20 years,” Bob Shanks, Ford’s chief financial officer, said in an interview. “But the industry is continuing to decline, and we think 13 million is the trough.”

The dire predictions for Europe overshadowed what were otherwise positive fourth-quarter results, which Ford reported on Tuesday.

The company reported a 54 percent gain in adjusted fourth-quarter profit as strong earnings in North America compensated for heavy losses in Europe. Ford said it earned $1.6 billion in the fourth quarter of 2012 compared with $1.03 billion a year earlier, excluding the impact of tax-valuation allowances in 2011. Those allowances inflated last year’s fourth-quarter net income to $13.6 billion.

For the full year, Ford said it earned $5.67 billion, a 5 percent drop from $5.97 billion in 2011, not including the tax-valuation changes, which increased the 2011 earnings to $20.2 billion.

The auto market in Western Europe remains abysmal, but some analysts agree with Ford’s assessment that sales may be close to their low point and could start to recover late this year as the euro zone crisis subsides.

Analysts at Goldman Sachs forecast that European auto sales would fall an additional 2.2 percent in 2013, to 12.9 million vehicles. But they will rise 3.9 percent in 2014, Goldman predicted, as car buyers start to feel more secure about their economic prospects.

In the meantime, though, companies like General Motors’ Opel unit and PSA Peugeot Citröen are trying to make broad reductions in jobs and production capacity.

The recovery, if it comes, could be too late for many workers and even some of the manufacturers.

The companies that have suffered the most are those that depend on the mass market and on southern Europe, including Fiat, Peugeot and Renault. Steady declines in sales since 2007 have left two-thirds of European auto plants operating at a loss, Goldman Sachs analysts estimated.

North American sales have been a bright spot for the world’s automakers, and Ford is no exception. Ford’s overall revenue in the fourth quarter was $36.5 billion, a 5 percent increase from $34.6 billion in the same period a year earlier. For all of 2012, revenue was $134.3 billion, 1 percent less than $136.3 billion in 2011.

Healthy sales of new vehicles in North America resulted in good profit margins, particularly in the United States, where the overall industry grew 13 percent last year.

Ford said it had $1.87 billion in pretax earnings in North America during the quarter, a 110 percent increase from $889 million in the fourth quarter of 2011. For all of 2012, Ford had pretax profit of $8.34 billion in North America, compared with $6.19 billion in 2011.

But the company’s European operations continued to struggle as overall demand plunged, particularly in southern Europe.Ford reported a $732 million pretax loss in Europe for the fourth quarter, compared with a $190 million loss in the same period in 2011.

For all of 2012, Ford said it had a pretax loss of $1.75 billion in the region. By comparison, the company reported a loss of $27 million in Europe for all of 2011.

Investors, apparently shaken by the scale of the losses and Ford’s dismal forecast for 2013, sent the automaker’s shares down nearly 5 percent to $13.14 in Tuesday’s trading.

Jack Ewing contributed reporting from Frankfurt.

Article source: http://www.nytimes.com/2013/01/30/business/north-american-results-bolster-ford-earnings.html?partner=rss&emc=rss

Appeals Court Suspends Peugeot’s Job-Cut Plan

The Paris Court of Appeals partially overturned a September decision by a lower tribunal, agreeing with a union complaint that Peugeot had failed to adequately discuss its revamping plans with workers at Faurecia Intérieurs Industries, an auto parts maker in which it owns a majority stake.

The appeals court reached the decision Monday, but did not make it public until Tuesday.

The appeals court held that Faurecia — which is also seeking to cut jobs — must formally consult with its workers before Peugeot can begin putting its own plan into effect. Faurecia said Tuesday that it would begin the consultation process “without delay.”

A Peugeot spokesman, Pierre-Olivier Salmon, said the decision would have little practical effect on the company’s plans because “we’re only in the negotiation phase now, anyway.” The appeals court left untouched the tribunal’s dismissal of the union’s request to overturn Peugeot’s restructuring plan.

Peugeot is battling to regain its footing in a European auto market that shrank by more than 8 percent last year. It is particularly vulnerable to the slump because it does not have a large presence in high-profit luxury vehicles and is dependent on the European market, including southern European countries that have been badly dented by the sovereign debt crisis.

The company said last year that it would close its plant in Aulnay-sous-Bois, near Paris, and was aiming to cut 8,000 jobs of the roughly 97,000 people it employs in France. Peugeot said it hoped to achieve the staff cuts mainly by offering early retirement and buyouts. It has also said it will not replace some other departing workers as it seeks to reduce its total French work force by around 11,200 jobs by mid-2014. Strikes and other industrial actions have become common, with union employees on Monday interrupting production at the Aulnay facility for a time.

The French company last year sold a 7 percent stake to General Motors, which has its own problems in Europe with its struggling Adam Opel unit. The two companies have formed a loose alliance to cooperate on vehicle projects and logistics.

Peugeot’s legal setback serves to illustrate the difficulty of streamlining operations in France, particularly in an industry that the government views as a strategic priority amid wide concerns for the country’s competitiveness. President François Hollande, a Socialist, has said Peugeot restructuring plan was “not acceptable.”

Monday’s ruling also shows how seriously courts here take companies’ legal obligations to workers. Earlier this month, a court threw out the overhaul plans of Le Crillon, a landmark luxury hotels in Paris, just months before it was to close for a two-year renovation. The hotel’s owner, the tribunal found, had failed to adequately consult with its 360 employees.

Article source: http://www.nytimes.com/2013/01/30/business/global/30iht-peugeot30.html?partner=rss&emc=rss

European Cloud Over Ford

Appeals Court Suspends Peugeot’s Job-Cut Plan

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