DEARBORN (WWJ) – Higher warranty costs, lower sales and problems in Europe and South America cut Ford’s third quarter profit by a third from last year.

The company posted earnings of $835 million in a third quarter that the company described as “profitable, but challenging.”

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“Challenging, from three points of view,” says Chief Financial Officer Bob Shanks. “Lower volume in North America and South America; higher warranty costs, that was primarily in North America; also, from the strength of the dollar we had some adverse balance sheet effects, primarily in South America.”

Despite the rough environment Ford’s numbers did beat analyst expectations. Still, we saw earnings fall from last year in most areas of the world.

North American earnings were down 38 percent to $1.4 billion.

“Recalls deteriorated our profits by about 630 million dollars in the quarter,” said Shanks. “That was largely in North America.”

Ford lost $439 million in Europe and lost $170 million in South America.

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Shanks says Europe continues to be difficult.

“Europe has clearly got a lot of challenges, the external market. You’re starting to see signs of deceleration of growth in the Eurozone.”

The company posted pre-tax earnings of $1.3 billion, and continued with its guidance of a $6 billion pre-tax profit for the full year.

When that lowered guidance was announced earlier this month, it prompted a large sell-off of Ford stock.

Ford is currently in the midst of a series of product launches, which the company hopes will push sales up next year, and return 2105 profits to the $8.5 to $9.5 billion range.

“During the third quarter, we continued to introduce an unprecedented number of new vehicles and invest heavily in the new products and technologies that will deliver strong profitable growth beginning next year,” said Ford CEO Mark Fields. “We also addressed business challenges head-on using our proven One Ford plan. Everyone at Ford remains focused on accelerating our progress.”

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