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Ford boosts outlook, second-quarter profit tops estimates

Ford logos are seen at the assembly line of the Ford car factory of Saarlouis, December 6, 2010. REUTERS/Vincent Kessler
Ford logos are seen at the assembly line of the Ford car factory of Saarlouis, December 6, 2010. REUTERS/Vincent Kessler

By Deepa Seetharaman and Ben Klayman

DETROIT (Reuters) - Ford Motor Co , the No. 2 U.S. automaker, boosted its full-year outlook and posted a second-quarter profit that trounced expectations on the strength of operations outside North America.

Ford said it pretax operating profit this year would be "about equal or higher" than last year's $8 billion, rather than "about equal."

"Given Ford's conservative nature, we view these seemingly subtle language changes as fairly aggressive," Morgan Stanley analyst Adam Jonas said in a research note. Its shares rose 2.5 percent to $17.36 in early trading.

Ford expects to be profitable in Asia this year. The company also forecast a smaller loss in Europe in 2013 - $1.8 billion versus its previous forecast of $2 billion.

For the second quarter, Ford reported a pretax profit of 45 cents per share, 8 cents better than the analysts' average estimate, according to Thomson Reuters I/B/E/S.

The stronger-than-expected results were driven by profits in Asia and South America as well as a narrower loss in Europe, analysts said. Morgan Stanley described the Asia Pacific region as the "star" of the quarter. The South America outcome was also much better than the consensus target.

Ford posted its best-ever profit in Asia of $177 million as well as a $151 million profit in South America. The automaker also recorded a $348 million loss in Europe, smaller than the $404 million loss posted a year earlier.

Taken together, Ford's operations in its three regions outside North America broke even, Chief Financial Officer Bob Shanks told reporters in Dearborn, Michigan. In the first quarter, the combined loss was $600 million.

"We're at the beginning of the phase where over the next several years you'll start to see the operations outside North America take on more and more significance," Shanks said. "You're starting to see what's possible."

TURNING POINT IN EUROPE

Ford said its restructuring in Europe was on track. The company said improving consumer sentiment suggested the beginning of a "stabilization" in the region, where an economic downturn sent sales to 20-year lows in the first half.

"There is a bit of a turning point here in the sense that it's the first time we've had heard good news incrementally out of Ford in Europe," said Citi analyst Itay Michaeli, who has a "buy" rating on Ford shares.

"It's not like Europe is back, but in terms of an inflection point for news, it's significant," Michaeli added.

In North America, Ford reported a pretax profit of $2.3 billion boosted in part by higher truck sales. Its second-quarter revenue rose 15 percent to $38.1 billion. Global vehicle prices, excluding the impact of incentives, rose $1 billion in the quarter. Prices increased in every region except Europe.

Ford said its automotive operating margins this year would be roughly the same as 2012, better than its previous outlook of "about equal" or "lower."

The company also said 2013 automotive cash flow would be "substantially higher" than last year's $3.4 billion. In the previous quarter Ford had simply said "higher." In the first half, Ford posted cash flow of $4 billion.

"We've already blown past what we did all of last year," Shanks told reporters.

Ford, the only U.S. automaker to avert a bankruptcy filing during the 2009 financial crisis, is ramping up efforts to grow in the United States. The company plans a faster model changeover for the top-selling F-150 to take advantage of strong truck demand in the United States.

Reflecting its optimism, Ford said on Tuesday it was looking to hire 3,000 salaried workers this year, 800 more than previously announced.

While many areas of Ford's headquarters were unused during the downturn, employees are now fighting over space in the building, Ford's human resources chief Felicia Fields told reporters Tuesday.

(Corrects spelling of analyst name in third paragraph to Jonas from Jones)

(Reporting by Deepa Seetharaman and Ben Klayman; Editing by Jeffrey Benkoe)

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