Ford Motors (NYSE:F) is scheduled to announce its Q3 earnings on October 30. All eyes will be glued to automaker’s European losses, which are expected to exceed $1 billion in 2012. Ford posted an operating loss of $403 million in the second quarter and the automaker’s sales in the region were down 10% in the first half of the year.

Ford plans to turnaround its European operations through introduction of new models and lay-offs.^[1] In September, Ford announced that it was planning to lay-off hundreds of workers in its European plants. The job cuts will be voluntary and primarily aimed at salaried employees. Ford also plans to launch a total of 15 new or refreshed models in Europe over the next five years in order to reinvigorate its flagging sales in the region. The company plans to roll out newer versions of Mondeo, Fiesta and Kuga and the iconic Mustang.

See full analysis for Ford Motors

Consolidating North America

North America, which accounts for 60% of Ford’s revenues, has been steady. Ford’s revenues and vehicle sales were up 3% and 1% respectively in the first half of the year. Although Ford has lost some market share this year, that was not unexpected since the Japanese automakers were expected to rebound strongly on higher production after they were hurt badly last year due to the tragic tsunami which impacted their production as well as supply chain.^[1]

With the 2013 versions of Fusion and Escape, Ford might be able to snatch back some of its lost market share in the last quarter. Ford’s U.S. sales in September were helped by a 15% increase in the sales of the new Escape model. Moreover, with the help of new models released this year, the automaker should be able to command a higher pricing for the remainder of the year.^[2]

Optimizing costs through the company’s ‘One Ford’ mantra remains on track. As part of its ‘One Ford’ plan, the company aims to develop cars which are truly global in nature while reducing costs by sharing technology and platforms. By the end of next year, 85% of the company’s global vehicles sold will be built using only 9 different vehicle platforms.^[3]

China continues to play an ever important role in Ford’s international operations as sales increased more than 30% in each of the three months of the third quarter. China currently accounts for less than 10% of Ford’s global sales (and the whole of Asia/Pacific contributes less than 7% to the total revenues) so these volume jumps don’t have a significant impact on the income statement right now. However, the automaker will benefit greatly once the Chinese contribution becomes more important. To carry on the momentum, the automaker is investing heavily in the country and plans to introduce 15 new models by 2015.^[4]

We have a $13 price estimate for Ford, which is about 30% higher than the current market price.

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