Carmaker Ford's profits increase

27 January 2012 Last updated at 22:50 GMT Ford CEO Alan Mulally: "European production has been reduced to match a lower demand"

US carmaker Ford has reported a surge in profits in 2011, fuelled by a one-off payment and strong sales in its home country.

The company report a net income of $20.2bn (£12.9bn) for last year, up from $6.5bn in 2010.

And for the last three months of the year, profits jumped to $13.6bn from just $190m in the previous year.

"2011 marked a milestone year in our work to strengthen our balance sheet," Ford said.

The bulk of its profits in the fourth quarter came from favourable one-time, non-cash special gain of $12.4bn marked against the value of some deferred tax assets.

"It could be argued that the decision to book the tax profit now equates to management confidence in prospects for the company," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

Excluding that gain, the carmaker's operating profit fell to $1.1bn during the fourth quarter, from just less than $1.3bn a year earlier.

Continue reading the main story Jorn Madslien Business reporter, BBC News

On the face of it, last year was good for Ford.

But dig a bit deeper and it soon becomes clear that the carmaker is struggling in some of its key markets.

Europe is particularly challenging at the moment: Ford is losing money here and its market share is slipping.

Ford's arch rival in Europe, Opel/Vauxhall, is in a similar pickle, with both facing tough competition from Asian rivals and from German luxury car companies.

But the biggest problem in Europe is overcapacity caused by countries protecting their domestic carmakers during the recession, according to Ford.

Ford chief executive Alan Mulally told the BBC that the floods in Thailand were a major disruption to production in Asia Pacific and meant the company made a small loss in the region.

However, he said he was "very positive about [future] growth" in the region.

He also said the firm would be scaling back production in Europe to meet the lower demand that has resulted from the economic slowdown.

Mixed sales performance

Ford said that it sold 693,000 cars and trucks, up 78,000 a year ago, in the fourth quarter in wholesale in North America and recorded a profit.

In Europe, which experienced a slump due to its debt crisis and slow growth, fourth quarter sales fell by 6,000 to 391,000 vehicles, and it recorded a loss.

The carmaker announced the resumption of its quarterly dividends as well.

Ford and rival General Motors both reported record car sales in China for 2011, despite a slowdown in the market in that country.