Tax-related windfall boosts Ford's profits A tax-related windfall and strong US earnings boosted Ford Motor's net profit for 2011 to its best level in 14 years, but the US carmaker's fourth-quarter result was weaker than a year ago, weighed down by poorer performance overseas. Lewis Booth, Ford's chief financial officer, said the company might need to dismiss some of its temporary workers in Europe if slowing demand for cars on the continent prompted it to cut production. A one-time special item of $12.4bn relating to Ford's release of almost all valuation allowance against deferred tax assets in the fourth quarter lifted its full-year net income to $20.2bn, an increase of $13.7bn or $3.28bn on a year ago. In 2006, when Ford began making financial losses as it restructured, it took a valuation allowance against deferred tax assets. "This year we have had three years of profitability," Mr Booth told the Financial Times in a telephone interview. We felt able to release the valuation allowance and bring it back on to our balance sheet. Ford's biggest net profit until now was the $22.1bn it reported in 1998. Stripped of the one-off special item, the carmaker's full-year operating profit of $8.8bn was $463m higher than a year ago, and its best result since 1999, when it reported $11.5bn for the year before tax. However, Ford's fourth-quarter profit before tax was $1.1bn, or 20 cents a share, 15 per cent lower than a year previously. Ford had indicated that its performance would weaken in the final three months of 2011, due partly to the problems in Europe, where it and all of its mass-market competitors face a declining market and intense pressure to discount their cars. The US, where demand for vehicles is rebounding strongly, was the main driver of Ford's earnings last year and in the fourth quarter. Ford's sales in North America grew by 11 per cent last year, due in large part to demand for its big and profitable F-series pick-up trucks. The carmaker's North American business earned $889m before tax in the fourth quarter, compared with $670m a year previously. However, Ford of Europe reported a pre-tax loss of $190m, compared with its loss of $51m in the fourth quarter of 2010. Mr Booth described Europe as "a challenging business environment." Ford expects total car sales to fall to between 14m and 15m this year from the 15.3m recorded in 2011. Ford's CFO said: "We will probably have to get rid of some temporary workers if production comes down a little bit." He would not say how many temporary workers the company employed, or how many might go. Rival French carmaker PSA Peugeot Citroën and Swedish truckmakers Volvo and Scania are cutting some temporary staff because of slowing demand for their products. Peugeot is reducing its headcount by 6,000 in western Europe and the cull also includes some full-time workers. Ford, like many other mass-market carmakers, has scheduled some non-production days at its European plants to align its output of cars with weakening demand. Mr Booth said Ford was responding to Europe's slower market by continuing to invest in new products, such as its new B-Max and Kuga models due to launch this year. Asia had been a "difficult market" for Ford in 2011 because of the natural disasters in Japan and Thailand. Competitiveness was increasing in South America's car market, Mr Booth said. Ford lost $83m before tax in the fourth quarter in the Asia-Pacific region and Africa, compared with the profit of $23m it reported a year ago. Ford's profit in South America narrowed to $108m, compared with $670m in the fourth quarter of 2010. We are investing in every other region," Mr Booth said. Over time, you will see the fruits of all that work. Ford, the only one of the three Detroit carmakers to avoid bankruptcy and a bail-out during the global financial crisis, reinstated its dividend last month for the first time in five years.