Ford takes 2d quarter hit in bid to expand in Asia
DEARBORN, Mich. - Ford Motor Co.’s ambitious plans to grow in Asia took a toll on its second-quarter profit, with higher costs to design and sell cars offsetting rising sales.
The company’s net income fell 8 percent to $2.4 billion for the April-June period. Ford blamed higher prices for steel and other commodities but said that after years of restructuring the company is strong enough to spend heavily on future growth. Ford spent $400 million more on engineering and advertising new vehicles than it did a year earlier.
“That’s the new thing for Ford, that we are investing in the future,’’ said Lewis Booth, chief financial officer.
Chrysler Group also took a hit, reporting a loss of $370 million in the quarter. Like Ford, Chrysler said the loss was a sign of a healthier balance sheet. Without a $551 million accounting charge for refinancing bailout debts to the US and Canadian governments, Chrysler would have earned $181 million.
Ford’s worldwide sales were up 7 percent. Revenue rose 13 percent to $35.5 billion. But the company warned last month that its profit could slip, citing investments in future products.
Investment in Asia is the next step in chief executive Alan Mulally’s plan to move beyond the company’s near-collapse in 2006, when it took out $23 billion in loans to restructure itself. Since then, it has cut costs and sunk billions into improving cars, resulting in nine straight quarterly profits. Now, it aims to expand in Asia, where it is dwarfed by General Motors Co. Ford plans to roll out 15 cars in India and China over four years, spending hundreds of millions more on product development than a year ago.