Ford Forecasts $300 Million South America Loss in First Quarter
“Weakening currency and inflation pressure will challenge our profits and margins in 2013,” Joe Hinrichs, Ford’s president of the Americas, said yesterday at a Bank of America Corp. auto conference in New York. Moves by Brazil and Argentina to limit imports from Mexico also have affected sales of its Mexican-built Fusion and Fiesta cars, he said.
The regional loss places more pressure on Ford’s operations in North America, where the Dearborn, Michigan-based company posted record pretax profit and operating margin for 2012. The second-largest U.S. automaker has forecast a full-year loss of about $2 billion in Europe, while it targets breaking even in South America and Asia.
Some automakers are entering the South American market for the first time, aggressively pricing their vehicles and establishing local production, which Ford said may lead to excess capacity. The automaker also cited a challenging economic environment in Argentina.
Ford would have recorded a translation loss of about $200 million in its year-end financial statements had Venezuela’s devaluation occurred before the end of last year, the company said in a Feb. 19 regulatory filing. The effect of the country’s move will be included in operating results and not reported as a special item, Hinrichs said.
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