Ford Motor Co. (F - Free Report) alerted that it may have to suspend or slow down production at its plants in Asia-Pacific due to a shortage in supply of parts following the earthquake and tsunami in Japan on March 11 that killed many people, broke down infrastructure and triggered a nuclear crisis.
Ford operates as many as 13 plants in Asia-Pacific, including 8 assembly plants in Australia, Thailand, Taiwan, Vietnam, India, Philippines and China. The company expects to downsize operations at the plants from the last week of April until May. However, it did not specify which facilities will be idled for how long.
The automaker stated that its decision will not affect its financial results unless it finds alternative sources of supply. It is already pursuing other sources of supply for some of its parts in order to evade the adverse impact from the disruption of production.
Ford had already halted operations at its plants in the U.S. and Europe due to parts shortages. At the beginning of this month, the company has idled its plant in Genk, Belgium for 5 days starting April 4. The plant manufactures Mondeo sedans and Galaxy and S-Max minivans.
Automakers around the world are facing parts shortage problem due to the disaster in Japan. Apart from Ford, General Motors Co. (GM - Free Report) is the only U.S.-based automaker to be affected by the calamity so far. These apart, Japanese automakers, including Honda Motor Co. (HMC - Free Report) , Toyota Motor Corp. (TM - Free Report) and Nissan Motor Co. (NSANY - Free Report) are plagued by the natural disaster in the country.
Asia-Pacific is one of the most important markets for Ford. The company has been pursuing a major expansion plan in the market, including China, India and Thailand. Since last year, it has invested $510 million in China and $500 million in India as a part of the plan.
Last year, Ford has added 40 dealerships in China as a part of the plan. Further, the automaker plans to add 66 new dealerships by the end of the year, raising its total dealerships to 340 in the country.
Ford’s sales in China grew 40% in 2010 driven by higher sales of Focus compact and Fiesta subcompacts. Changan Ford sold 403,283 vehicles, an increase of 34% from the last year. Meanwhile, Ford’s commercial vehicle venture in China, Jiangling Motors Corp., reported an impressive 56% rise in sales to 178,999 units.
Recently, Ford announced plans to introduce 8 new models in Southeast Asia over the next 5 years in order to boost its market share from the 3% presently in the region. At the same time, the company has revealed its plan to invest 7 billion yuan ($1.1 billion) in China in order to expand production capacity.
Ford, a Zacks #3 Rank (Hold) stock, posted a 24% fall in profit to $1.2 billion or 30 cents per share (before special items) in the fourth quarter of 2010 from $1.58 billion or 43 cents per share (before special items) in the same quarter of 2009. With this, the automaker has missed the Zacks Consensus Estimate by 19 cents per share.
The decline in profit was attributable to lower year-over-year revenues generated by the company’s automotive operations as well as the financial arm. Total revenue during the quarter ebbed 7% to $32.5 billion. However, excluding revenues from Volvo, sales improved by $1.6 billion or 5% from the fourth quarter of 2009.