Ford predicted a "substantial improvement" in profitability in its struggling European region this year after posting a slim profit in the first quarter.
The automaker's European business earned $57 million in the first three months compared with a $119 million profit in the same quarter last year.
The profitability drop was due to unfavorable exchange rates, Ford Chief Financial Officer Bob Shanks said on an earnings call on Friday. Schanks said the profit "hadn't been expected" but was a sign that Ford was heading in the right direction in the region.
"For the full year [in Europe], we expect to deliver substantial improvement in profitability versus last year, driven by favorable mix, higher net pricing and lower cost," Shanks said.
Last year Ford posted a $398 million loss in Europe.
CEO Jim Hackett said on the same call that Ford's future business in Europe will be leaner, more focused and will capitalize on the profitable areas of commercial vehicles and SUVs.
Ford is carrying out a big restructuring in Europe including job losses, cutting slow-selling models and closing a gearbox plant in France as the company tries to reverse persistent losses.
The $57 million first-quarter profit equates to a margin of 0.7 percent but does not include costs associated with restructuring in the region. Ford has said it is aiming for a 6.0 percent margin in Europe without giving a timeframe.
Ford as a whole took a $600 million profit hit in the quarter, of which the "vast majority" were associated with the restructuring in Europe and South America, Shanks said.
Ford's European profits were buoyed by improvements in its successful commercial vehicle lineup, which includes the Transit range and the Ranger pickup, the executive said.
Ford described its commercial vehicle profits as healthy. "This was offset partially by losses on passenger cars," Shanks said.
Ford this year will launch a new Kuga compact SUV as well as a new small SUV called the Puma, giving it fresh product in two key segments in Europe.
Ford's commercial vehicles will ensure Europe keeps growing in profitability despite associated costs with tougher European CO2 reduction targets arriving in 2020/21, 2025 and 2030, the company said.
Ford headwinds in Europe include further costs associated with job cuts and restructuring, as well as the fallout from a possible disorderly exit by the UK from the European Union trading bloc.
The UK is Ford's biggest European market. Ford said in its most recent annual report that the cost to the company of the UK leaving without an EU deal could be $500 million to $1 billion in 2019, not including currency exchange effects.
