(F) Ford Motor Plans Layoffs in Europe

Ford Motor Co. (F) plans to layoff 4,000 workers at its Valencia, Spain assembly plant for 39 days between January and October in 2012 in response to weakening demand for cars in Europe on the back of the ongoing Eurozone financial crisis. The plant employs a total of 6,200 workers.

The automaker plans to stop assembling Ford Fiesta hatchback at the plant and instead produce Kuga compact sport- utility vehicle and Transit Connect delivery van.

The present Eurozone financial crisis will impact the operations of many global automakers, especially Ford and General Motors Company (GM). Both the automakers have a significant exposure to the market.

The car dealers in Europe are trying very hard to entice the consumers with the help of steep discounts and other sales promotions, which will put a downward pressure on their margins. The West European car market is expected to decline to 11 million units in 2012.

Ford, a Zacks #4 Rank (Sell) stock, posted a $66 million or 3.5% fall in profits to $1.85 billion in the third quarter of the year from $1.91 billion in the same quarter of prior year. However, on per share basis, earnings were 46 cents versus 48 cents a year ago, beating the Zacks Consensus Estimate of 44 cents. The decline in profits was attributable to fall in commodity prices and anticipated reductions in Financial Services results.

Total revenues in the quarter went up $4.1 billion or 14.1% to $33.1 billion. This compared with the Zacks Consensus Estimate of $29.8 billion.

Ford expects full year industry volume in the U.S. to be 13 million units compared with the previous guidance of 13 million–13.5 million units. For the 19 markets covered by Ford, industry volume is expected to be 15.2 million units compared with the previous guidance of 14.8 million–15.3 million units.

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