Ford’s South American operation
We’ve already looked at The Ford Motor Company’s (F) 1Q15 financial performance for its North American operation. In this part, we’ll see how Ford’s South American operation fared in 1Q15.
Ford has its operations in several countries in the region, including Brazil (EWZ), which is Ford’s largest market in South America. Most countries in the region are negatively impacted by stagnating growth coupled with high inflation.
The weakness of local currencies, especially the Brazilian Real against the US dollar has not helped Ford’s cause in the region. It has also faced pricing pressures in the region. However, Ford increased its market share in Brazil to 10.5% in 1Q15. It had a market share of 9.2% in 1Q14.
The above chart shows the 1Q15 financial performance of Ford’s South American operations. As you can see, it posted a pretax loss of $189 million. This is an improvement over the $510 million loss Ford posted in 1Q14. Last year, Ford had a negative impact of $310 million from the balance sheet exchange effect in Venezuela.
Operating environment remains challenging for Ford in South America. Ford is taking several measures such as cutting costs, finding new revenue sources, and adjusting production levels to mitigate the impact of the slowdown. It’s also increasing the content of locally made components in its vehicles to tide over the effects of currency volatility. However, the year looks challenging for its operations in this region.
Europe is another region where Ford has faced challenges. In the next part, we’ll see how Ford’s European operations delivered in 1Q15.