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Ford Europe Loses Money Again; Big Shake-up Coming

Ford Europe Loses Money Again; Big Shake-up Coming.

Vans Make Big Margins.

Ford Europe notched up a loss, leading to speculation strong reform measures might be needed to turn the operation around.

Ford Europe lost a pre-tax $73 million in the second quarter, after an $88 million profit in the same period last year, and now expects a full-year loss after earning $234 million in 2017. 

This must have been embarrassing after news even perennial loss-maker Opel Vauxhall was making money.

After the loss news, Ford Motor Co CFO Bob Shanks had this to say.

“Clearly our European business requires a major redesign and refocus, particularly given the ongoing effects of Brexit. That work is already under way,” Shanks told an analysts meeting.

Ford Europe said it needed to concentrate on highly profitable vans – now earning a 13 per cent profit margin – and SUVs to hit its long-term target of a 6 per cent margin.

Standard & Poors said this significant underperformance is likely to spur what it called “meaningful restructuring actions”.

Investment researcher Jefferies said Ford Europe was hit by poor product planning and needed to repair unprofitable segments like the Fiesta.

“With PSA in Europe now largely fixed Ford looks like the closest candidate for a traditional auto turnaround,” said Jefferies analyst Philippe Houchois.


 

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