Ford shares fall on Europe problems

Bob Shanks, Ford: "The industry will start to recover in 2014"

Shares in Ford have fallen 3.9% in early Wall Street trading on the rising cost of fixing its European business.

The US carmaker cautioned that 2013 losses in Europe would be $2bn, greater than its previous $1.5bn estimate.

The stock market reacted negatively, despite Ford reporting profits for the last three months of 2012 that beat expectations thanks to strong US sales.

Earnings after tax for the quarter were $1.6bn (£1bn), with underlying profits up 55% from the same period in 2011.

Revenues rose 5% overall, driven by a 13% rise in North America.

Ford boasted that its North American unit had enjoyed its most profitable fourth quarter and year since it first began recording the region's performance in 2000.

The contrasting fortunes of the number two US carmaker on either side of the Atlantic reflect the broader market trends. While total US car sales hit a post-financial-crisis high last year, 2012 sales in Europe fell more than 8% from the previous year.

Ford, like many rivals, is in the process of downsizing its European business to reflect the shrinking market, with resulting losses due to redundancy payments and the write-off of the value of factories and other assets it owns in the region.

The company said these costs were turning out to be more than expected, thanks to the strength of the euro and the higher valuation of employee pension claims. It has also marginally cut its forecast for total European sales in 2013.

To add to the firm's woes on the continent, chief financial officer Bob Shanks admitted to investors that the delayed launch of the new Mondeo in Europe would cost Ford several hundred million dollars in missed revenues.

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