The heady profit gains of 2011 now are colliding with Europe’s debt crisis and heavy investments in Asia that generated losses in the two regions in the latest quarter. Ford’s home market again was lifted by strong sales gains even as tougher competition ate into per-vehicle profits, reported The Wall Street Journal.

The company forecast earnings this year would be flat compared to 2011′s strong profits, suggesting a period of stable profitability. It also said its share of rising U.S. sales this year would match, or rise only slightly, from the year-ago level.

In a sign of rising competition and cost pressures, Ford said its pre-tax per-vehicle profit in North America last quarter fell to $1,317, its lowest of the year and down from a peak of $2,806 in the first quarter last year.

“We met most of our objectives despite a number of challenges,” Ford Chief Financial Officer Lewis Booth said of the quarter ended Dec. 31 during an interview on Friday. “We saw the external environment deteriorate. Europe is challenging and will remain challenging for some time.”

Its North American operations earned $889 million last quarter, compared with $670 million for the same period a year earlier. The company countered rising cost for steel and other materials by boosting vehicle prices. However, its loss in Europe widened to $190 million from $51 million while its Asia Pacific and Africa unit, which includes Thailand, swung to a loss of $83 million.

The company’s record quarterly profit stems from a $12.4 billion gain from an accounting change to reverse a valuation allowance it made against deferred tax assets in 2006. Ford reversed the allowance in light of recent profits.

Net income was $13.6 billion, or $3.40 a share, compared with $190 million, or five cents, a year earlier. Revenue for the quarter was $34.6 billion.

Excluding the one-time gain, profit was $1.1 billion, or 20 cents a share, below analysts’ reduced estimate of 25 cents a share that reflected the slowdown in Europe and flooding in Thailand that reduced production by 34,000 vehicles last quarter. The Dearborn, Mich., auto maker reported a 30 cent-a-share profit in last year’s fourth quarter.

Ford shares recovered somewhat from an early drop and were off 3.6 percent to $12.28 in afternoon trading on Friday.

“There’s no way of sugar coating the fact that the quarter was light,” said Jefferies & Co. auto analyst Peter Nesvold in a research note on Friday. “However, the details suggest automotive margins will be up year-over-year in 2012.”

Results show how the debt crisis in Europe is affecting profitability. Ratings firm Moody’s Investors Services said on Thursday it expects new-vehicle sales to fall 6.2 percent in the Western European countries this year compared with 2011, with the steepest decline in France.

“There is a lot of overcapacity in the industry, and that is causing an increase in the level of incentives,” Ford’s Mr. Booth said. It is too soon to say whether Ford’s European operations would be unprofitable again this year, he said.

The auto maker had warned earlier this month its Asia, Pacific and Africa business unit would report a loss on lost production caused by Thai flooding. Ford’s Thailand assembly plant wasn’t directly affected. Supplier plants were affected, which halted or slowed the flow of parts to the plant.

“We do see Asia-Pacific being modestly profitable this year,” Mr. Booth said.

Overall, Ford said its automotive pre-tax operating profit this year will improve from last year while earnings at Ford Motor Credit will be lower than in 2011. Total pre-tax operating profit is expected to be equal to 2011. Capital expenditures during the year will be between $5.5 billion and $6 billion as it continues adding plants, especially in Asia.

For the year, the company reported a net profit of $20.2 billion, or $4.94 a share, compared with $6.6 billion, or $1.66, a year earlier. The earnings represent the third straight annual profit for the auto maker, which sidestepped the need for a government bailout and avoided bankruptcy protection, unlike Chrysler Group LLC and General Motors Co.

The results also give Ford its most profitable year since 1998, when it reported income of $22.1 billion, bolstered by the sale of lending arm The Associates, which it had acquired 10 years earlier.

Separately, the auto maker said it will make profit-sharing payments to about 41,600 U.S. hourly employees based on its 2011 financial performance. Ford will pay each worker $6,200. Half of that amount was paid in December, and the remaining will be paid in March. The company said it also plans to make a $3.5 billion contribution to its global pension plans during the new fiscal year.

The company said it still plans to produce 675,000 cars and trucks in North America during the current quarter, an increase of 18,000 vehicles over last year’s quarter. It plans to cut first-quarter output throughout the rest of the world, and especially in Europe where production plans will be trimmed by 36,000 vehicles to 410,000 new cars and trucks during the quarter.

This is Ford’s third consecutive annual profit, after losing more than $30 billion between 2005 and 2008.

But the company’s fourth quarter results didn’t meet expectations – with concerns raised about heding and commodity costs. Ford also sounded some caution about 2012 – especially in Europe and South America, reported The Detroit News.

Ford’s stock fell sharply on the results. In early results, Ford was down 4.6 percent to $12.16, or $0.59, in very heavy trading.

Ford reported fourth quarter earnings of $0.20 –excluding the accounting change — below the Wall Street consensus of $0.27 a share.

“If you get over the small disappointment over the fourth quarter, this has been a good year,” said Ford chief financial officer Lewis Booth in an interview, noting the economic uncertainty in Europe and Asian natural disasters.

Excluding the one-time tax gains, it was still Ford’s best annual operating profit since it earned $11.5 billion in 1999, the company said.

Under a formula agreed to by the United Auto Workers, Ford’s earnings generated about $6,200 in annual profit sharing for its 41,600 hourly employees. Those workers received payments for the first half of the year, approximately $3,750 per person, in December. For the second half of 2011, the formula generated approximately $2,450 per employee, which is to be distributed in March. Profit sharing payments for individual employee will depend on how many hours each worked.

The company’s 2011 results were boosted by a one-time, noncash gain of $12.4 billion in prior year tax losses that had been set aside starting in 2006.

Ford’s pre-tax operating profit was $1.1 billion in the fourth quarter. Excluding the special item, Ford earned $8.8 billion in operating income in 2011.

“We delivered strong results for the full year as we continued to serve our customers around the world with best-in-class vehicles and make progress toward our mid-decade goals,” Ford President and CEO Alan Mulally said.

“Despite the continued uncertainty in the external environment, the strength of our North American and Ford Credit operations allows us to continue to invest for future growth.”

Ford has now reported 10 consecutive profitable quarters. For the year, Ford earned $6.2 billion in operating profits in North America, up from $5.4 billion in 2010.

But the company’s results for 2012 didn’t impress some analysts. JPMorgan analyst Himanshu Patel called the fourth quarter results “weak.”

Morgan Stanley auto analyst Adam Jonas said in a note that Ford missed its forecasts for fourth quarter results. But he said Ford’s “2012 outlook for ‘about equal’ total company pretax profit with higher auto profit and auto margins is encouraging. 2012 may be shaping up to be a very good year for Ford.”

The automaker said it cut its debt from $19 billion to $13.1 billion by the end of 2011. Ford’s results were also boosted by $400 million by the sale of its Ford Russia operations to a joint venture.

Dearborn-based Ford said in 2012 it expects its market share to be “about equal” in the United States and Europe to 2011. Last year, it forecast market share gains in both the U.S. and Europe. Ford’s market share was up 0.1 percent to 16.5 percent in 2011 in the U.S. – but its retail share was flat at 14 percent.

Ford said it had a $190 million loss in Europe in the fourth quarter, up from a $51 million loss in same period a year ago. The company lost $27 million in Europe for all of 2011, compared with a $182 million profit in 2010.

The automaker said that it has challenges to address in Europe and South America. Uncertainties about the debts of major European countries have raised fears about a major economic slowdown in Europe.

The company’s pension plans, worldwide, are underfunded by $15.4 billion — up from $11.5 billion a year ago. In the U.S., its pension obligations are underfunded by $9.4 billion, up from $6.7 billion. Ford, which contributed $1.5 billion to its global pension plans in 2010, plans to make $3.5 billion in contributions to those plans this year, including $2 billion to its U.S. pension funds.

JPMorgan said Ford may be considering UAW pension buyouts — something that analysts have said General Motors Co. may announce later this year.

“Like GM, Ford is more actively discussing ‘de-risking’ steps for its pension, which include limiting liability growth, discretionary contributions … and ‘other actions under development,’ which may hint at UAW pension buyouts,” Patel said.

Ford Chief Financial Officer Lewis Booth said the automaker is considering unspecified “strategic actions” to address its pension underfunding. He declined to answer whether Ford is considering pension buyouts.

GM chairman and CEO Dan Akerson also declined to say this week if the automaker is considering a UAW pension buyout.

Ford Motor Credit Co. earned $2.4 billion in profits in 2011, down from $3.1 billion in 2010, because fewer leases are being terminated.

Chrysler Group SpA is to report Feb. 1, followed by Detroit-based GM on Feb. 16. Chrysler is expected to report a full-year profit and GM has earned about $8 billion in the first nine months of the year.

Ford reported its 11th consecutive profitable quarter, with net income of $13.6 billion, or $3.40 a share, compared with $190 million, or 5 cents, a year earlier. Excluding one-time costs, the profit was 20 cents a share, trailing the 25-cent average estimate of 15 analysts surveyed by Bloomberg.

It was the third straight annual profit for Chief Executive Officer Alan Mulally, 66, who has improved quality and expanded the lineup with fuel-efficient models like the Fiesta subcompact. Net income was boosted by a non-cash gain of $12.4 billion from eliminating a valuation allowance against deferred tax benefits, Ford said.

“It was another good solid year, but the gains weren’t quite as dramatic as in previous years,” said Efraim Levy, an analyst for S&P Capital IQ, who has a “buy” rating on Ford. “It will get tougher going forward.”

Ford slid 4.5 percent to $12.21 at the close in New York. The shares are up 13 percent this year after falling 36 percent in 2011.

Ford removed the valuation allowance, created in 2006 as it began reporting operating losses, because it expects to be profitable in the future and to use the tax benefits, according to a U.S. regulatory filing last year. Ford lost $30.1 billion from 2006 to 2008, as truck and sport-utility vehicle sales collapsed and the economy fell into the worst recession since the Great Depression.

“They’re telling the world that they’ve attained a level of confidence in their ability to generate substantial amounts of income for the foreseeable future,” said Robert Willens, a corporate tax specialist and president of Robert Willens LLC of New York. “It’s quite a positive, forceful statement on their ability to prosper going forward.”

Profit excluding some items for 2011 was $8.8 billion, or $1.51 a share, up $463 million from the previous year.

In the fourth quarter, the Dearborn, Michigan-based automaker was hamstrung by a weakening European market and flooding in Thailand that wiped out profits in its Asian operations, Chief Financial Officer Lewis Booth said today.

The fourth-quarter earnings miss was caused by “the external environment, the slightly greater impact than we anticipated of commodity costs, currency and the Thai floods,” Booth told reporters in Dearborn.

Ford spent $2.3 billion on commodities such as steel in 2011, more than the $2.2 billion it told analysts in October it would spend, Booth said.

The European market is deteriorating and Ford is not sure when it will turn around, Booth said. Ford declined to provide a forecast on whether it can make money in Europe this year.

“We think this has the potential to be another tough year economically in Europe,” Booth said on the “The Hays Advantage” on Bloomberg Radio. “We’re not making any predictions about Europe this year.”

There is too much automotive factory capacity in the region, which is causing automakers to boost incentives, Booth said. Ford increased incentives in the fourth quarter, while still improving net prices, he said.

Ford said its pretax operating loss in Europe widened to $190 million from a loss of $51 million a year earlier. In Asia- Pacific and Africa, Ford reported a pretax operating loss of $83 million, down from a $23 million profit last year. For the full year, Ford lost $92 million in Asia-Pacific and Africa and it lost $27 million in Europe.

“We’re obviously a little disappointed to be at just slightly worse than break-even for Europe,” Booth said in an interview. “We think of Europe as a solid business operating in a very difficult business environment. That business environment will turn at some stage.”

Ford’s outlook for Europe seems “a big optimistic,” said Matthew Stover, an analyst at Guggenheim Securities LLC in Boston. “We think that you’re going to have to see production reduced” and a loss for the year of $1.5 billion in Europe, he said.

Ford is on pace to meet its mid-decade goal of increasing global sales by 50 percent, Booth said. The automaker lost 34,000 vehicles of production to the Thai floods, which was more than it was expecting, he said.

“We expect overall to see Asia-Pacific to be steadily profitable, but we expect to see some spiking in the quarters because it is a volatile region,” the finance chief said. “We expect Asia-Pacific to be modestly profitable this year.”

Ford is building seven factories in the Asia-Pacific region and introducing new models in China and India, such as the EcoSport small SUV it introduced in New Delhi this month. This year in China, Ford will begin selling the Kuga SUV, which is based on the Escape SUV sold in the U.S.

“In the forward years, you can expect to see the pace in Asia-Pacific and Africa being relatively modest for the early part,” Booth said. “Then accelerating for the later part of the period as the plants come onstream and the new products come on stream.”

Ford said its fourth-quarter automotive operating margin fell to 2.2 percent from 3 percent a year earlier.

In North America, where Ford generates most of its sales and profits, the second-largest U.S. automaker reported pretax operating income of $889 million, up from $670 million last year. Ford’s U.S. sales rose 11 percent last year and it gained market share for the third consecutive year for the first time since 1970.

“Ford is still a North American company,” said Brian Johnson, an analyst with Barclays Capital. “In 2012, we’re looking for the U.S. sales rate to recover, their market share to remain solid and their pricing to remain solid with products like the Escape and the Fusion refreshed” with new styling.

Fourth-quarter sales rose 6.5 percent to $34.6 billion as Ford boosted North American production by 14 percent during the period to 674,000 cars and trucks. The average estimate for total fourth-quarter revenue was $33.5 billion, according to the average of four estimates.

Ford reiterated it will produce 675,000 cars and trucks in North America during the first quarter, up 18,000 vehicles from last year. Ford said today it will cut production in South America, Europe and Asia Pacific Africa this quarter.

Globally, Ford said it plans to produce 1.4 million cars and trucks in the first quarter, down 51,000 vehicles from last year.

For the year, Ford’s revenue rose 13 percent to $136.3 billion, compared with an average forecast of $134.7 billion from five analysts surveyed.

U.S. consumers paid an average of $32,028 for the company’s models last year, up 25 percent from 2002 and the highest price Ford vehicles have ever commanded, according to online auto researcher Edmunds.com.

Automotive debt, which excludes Ford Motor Credit, was $13.1 billion at year’s end, an increase from $12.7 billion on Sept. 30, the company said.

The debt rose in the quarter primarily because it tapped loans from the U.S. Department of Energy that boosted its obligations by $300 million, the automaker said. The federal loans are being used to produce fuel-efficient cars.

Ford has more debt than rivals because it borrowed $23 billion in late 2006, after Mulally arrived from Boeing Co. and before credit markets froze. That enabled the automaker to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC in 2009.

The company will contribute $3.5 billion this year to its global pension plans, including $2 billion to the U.S. plan.

Ford said it will pay $2,450 to each of its 41,600 U.S. hourly workers for second-half 2011 profits.

“Ford’s doing everything right except getting their stock price up,” said Gary Bradshaw, a fund manager at Dallas-based Hodges Capital Management, which owns about 250,000 Ford shares. “They’ve got their costs down, good products, good engineering and good leadership. Ford can do surprisingly well this year.”

Letters went out last week to about 20,000 salaried workers around the world with the good news, spokeswoman Marcey Evans confirmed.

The 2.7 percent base salary increases will take effect April 1, according to the letter obtained by the Free Press. Ford declined to discuss the size of the white-collar bonuses. The amount is based on performance and financial metrics that are still being calculated.

Last year, the average Ford salaried worker received a bonus equal to 15.5 percent of his salary, according to Sean McAlinden, an economist with the Center for Automotive Research.

Senior executives, including President and CEO Alan Mulally, Executive Chairman Bill Ford and Mark Fields, president of the Americas, received bonuses greater than their salaries, according to Ford’s 2011 proxy statement. Mulally has said Ford’s pretax operating profit for 2011 will exceed 2010′s $8.3 billion.

Last year, Ford salaried workers received bonus checks, but no merit raises. In 2010, they received only merit pay raises. There were no raises in 2009.

Ford paid its UAW workers a profit-sharing check that averaged $5,000 in March 2011 for the company’s 2010 results. Then, as part of the new four-year agreement ratified last fall, Ford’s 40,600 UAW workers received in December profit sharing averaging $3,252, based on the company’s North American profits in the first half of 2011. That was in addition to a signing bonus, competitive bonus and inflation protection lump sum.

In March, the hourly workers likely will get a second profit-sharing check based on North American profits in the second half of 2011.

Last year, Ford withheld merit raises because management determined compensation for its white-collar workers was competitive with 23 other companies Ford had benchmarked, including General Motors.

The increased compensation is “in line with Ford’s commitment to provide competitive base salaries and profitable growth for all,” Fields said in the letter.

Salaried bonuses are tied to a complicated formula that factors in such metrics as profits, market share, cost and quality.

Ford is expected to release its fourth-quarter and full-year financial results later this month.

Salaried bonuses are paid under the company’s Annual Incentive Compensation plan. The global plan covers about 20,000 employees in the U.S. and Canada, as well as managers in other parts of the world.

Ford is also increasing the amount it matches in employees’ Savings and Stock Investment Plans, the letter says.

In 2010, Mulally received a $9.45 million cash bonus on top of his $1.4 million salary.

Bill Ford received a $2.7 million cash bonus to augment his $1.4 million salary, compensating in part for declining a salary from 2005-07.

Fields was paid about $1.34 million in salary and given a $3.6-million cash bonus in 2010.

The problem is serious enough that Ford says owners should park their vehicles outside until they can be repaired, reported The Wall Street Journal.

The company said the vehicles have brake master-cylinder reservoir caps that could leak brake fluid. The fluid could leak onto a wiring harness connector for the vehicle’s antilock braking system. As a result the connector may corrode, melt or catch fire.

Ford said the defect affects 244,530 SUVs built from Oct. 22, 1999 through July 19, 2002. Under the recall Ford dealers will replace the brake master cylinder reservoir cap and modify the antilock brake system.

In a document filed with the National Highway Traffic Safety Administration, Ford said it expects to begin notifying Escape owners the week of Jan. 23. However, there may not be enough parts available by that date to repair all of the vehicles. If the parts are not available Ford will tell owners to keep their vehicles outside until they are fixed. Customers with questions can contact Ford at 866-436-7332.

The car maker is also recalling 205,896 Ford Freestar and Mercury Monterey minivans because of a transmission part called the torque converter output, which could fail. If this happens, the vans could suddenly lose power, increasing the risk of a crash.

Under the recall dealers will replace the torque converter free of charge. The recall is expected to begin in the second quarter of this year.

There are an estimated 800,000 Rangers still on the road. Drivers of the compact pickup acknowledge their solidarity by waving to one another.

With the end of production and closing of the 86-year-old Twin Cities Assembly Plant in Minnesota, Ford Motor Co. will be out of the compact pickup business in North America, reported The Detroit News.

Meanwhile, crosstown rival General Motors Co. prepares to launch the next generation of the compact Colorado in 2013. And Chrysler Group LLC is working on a compact unibody pickup to replace the discontinued Dodge Dakota.

At a time when automakers are introducing ever-smaller cars to meet fuel-efficiency regulations, Ford is killing its smallest truck and directing consumers to the full-size F-150 with a more efficient V-6 engine.

Ford will abandon a segment it led for 18 years until 2005, when it fell behind the Toyota Tacoma.

Ford’s rationale is that there is little price bump — less than $5,000 — to the larger F-150, and dwindling sales of the Ranger did not warrant making and selling the next-generation model in the U.S.

“We’ve got a tremendous heritage and history with Ranger,” said Doug Scott, Ford’s truck marketing manager.

“The product has been very good and was true to the Built Ford Tough brand,” Scott said.

“But the environment changed with full-size trucks becoming so much more fuel-efficient.”

The shift is evident in the plummeting sales figures.

Ranger sales peaked in 1999 at 348,358 and have declined since. They fell below 100,000 in 2006 and never recovered.

Part of the downfall is because the Ranger became dated; the truck received cosmetic upgrades but few substantive revisions since 1983.

“Time stood still,” said analyst Dave Sullivan of AutoPacific Inc. in Ann Arbor.

“It had become obsolete as Ford put money into the larger F-150.”

The Ranger did not follow the trend to crew cabs, more efficient engines, advanced technology and creature comforts. The big-brother F-Series got the attention and resources.

“When you look at how we have had to prioritize our resources, both human and financial over the last five-plus years, we definitely believe that F-150 and Super Duty were more important priorities, and that’s where we focused our resources,” Scott said.

“Compared to a V-6 Ranger, a number of our F-150 powertrains are more fuel-efficient, and we have a good value story to tell.”

But for those who want the machismo of a pickup to haul mulch but still fit in a one-car garage or small parking spot, Ford will have nothing in the showroom.

“A lot of our customers are not happy, obviously, that it is going away, and I imagine we will get more of that over the next month after Ranger goes out of production,” Scott said.

“Some owners don’t understand why we would move away from the segment,” Scott said. But he believes customers seeking an affordable and fuel-efficient vehicle have more small cars and utility vehicles from which to choose.

Sharon Hill of Windsor bought a dark red Ranger Splash with flare sides in the late 1990s and hung on to it until 2007.

“I loved my Ranger,” she said. She would have bought another Ranger — she loved sitting higher on the road than in a car — but she needed a real back seat for passengers.

“The F-150 is just too big,” Hills said. So she opted for a small car from a competitor instead.

“It’s sad,” Hill said of the Ranger’s demise in North America. “It was good looking, reliable, and I could get a truck in a car price range.”

The last Ranger off the line is earmarked for Orkin Pest Control, which has a fleet of about 5,000 Rangers. The company buys as many as 2,000 new trucks annually.

“When Ford officially told us they would not be producing the Ranger anymore in the U.S., we asked if we could have the last one,” said Paul Youngpeter, fleet director for Rollins Inc. of Atlanta, Orkin’s parent company.

The Ranger has been the mainstay of the Orkin fleet for more than 15 years because of its reliability, affordability and access to the bed, which Orkin outfits with a top or a toolbox. Some get pumps and spray rigs, as well.

Orkin has about 500 F-150s, but its size “presents a bit of a challenge,” Youngpeter said.

He has purchased enough stock to get through 2012 but is already shopping the competition, including the Colorado, Tacoma and Frontier, for the longer term.

The F-150 will be considered, but “it is not the best option. We prefer something smaller,” he said.

He must decide by mid-2012.

Orders like Youngpeter’s have contributed to the final sales rally for the Ranger.

More than 64,000 were sold through November, up 26 percent from a year ago. November sales were almost double October’s, and 2011 is on track to be the best sales year since 2007.

But the compact pickup segment is a shadow of its former self: Sales of about 260,000 through November represent about 4 percent of the total truck market.

“The segment has shrunk dramatically,” Scott said. “In 2000, the compact pickup segment was about 1 million units, and this year that segment will be lucky to be 250,000 or 300,000 units. When the segment was doing over 1 million units, we were doing over 300,000 Rangers. That gives you an idea of the volume changes.”

Ford sold almost 517,000 F-Series (about 70 percent of them F-150s) in the first 11 months. More than half the F-150s leaving the lot have a V-6 engine.

“The V-6 in the F-150 is so good, it makes a hard case for the Ranger,” Sullivan said.

But in other parts of the world, where the F-150 is simply too big, Ford has introduced the next-generation Ranger.

The new Ranger is built in Thailand and South Africa. A third plant in South America will start production in a few months.

Tariffs make it too expensive to import the foreign-made Rangers to the U.S.

“It leaves a sweet spot wide open for GM for buyers who want a domestic smaller pickup,” Sullivan said.

The AutoPacific 2011 Brand Study showed 19 percent of Ranger owners would buy another compact pickup, so they would have to defect to the competition.

GM has unveiled the next-generation global Chevrolet Colorado compact pickup, which will continue to be built and sold here.

The company is banking on gas prices making a small truck attractive.

“GM thinks there’s a market there and so do Toyota and Nissan, while Ford is putting all its eggs in the F-150,” Sullivan said.

The move comes after Ford earned $1.65 billion in the three months ended in September, its 10th consecutive profitable quarter, and negotiated a new four-year contract with the United Auto Workers covering its 40,600 U.S. hourly workers. The dividend will be paid March 1 to shareholders of record on Jan. 31, the Dearborn, Michigan-based automaker said in a statement.

“The board believes it is important to share the benefits of our improved financial performance with our shareholders,” Executive Chairman Bill Ford said in the statement. “It is an important sign of our progress in building a profitably growing company and our confidence in the future.”

Chief Executive Officer Alan Mulally revived Ford by focusing on quality and fuel economy in new models such as the Fiesta subcompact and redesigned Explorer sport-utility vehicle. Ford earned $9.28 billion in the past two years after losing $30.1 billion from 2006 through 2008 as a collapse in SUV sales was followed by the worst recession since the Great Depression.

Ford slipped 3 percent to $10.75 at the close in New York. The shares tumbled 36 percent this year after rising 68 percent in 2010.

The payout will cost Ford about $200 million a quarter, Chief Financial Officer Lewis Booth said in a conference call today. The automaker hopes to avoid cutting the dividend if the economy turns down, as it has in the past, Booth said.

“Compared to the past, we’ve substantially restructured the company; our break-even is lower than it was,” he said. “We would expect this to be a sustainable dividend.”

If the automaker’s financial results keep improving, “we’ll continue to look to see if we can increase the dividend,” Booth said.

Bloomberg analysts predicted in July 2010 that a 5-cent quarterly dividend would resume as soon as 2012. The Bloomberg dividend estimates are based on seven criteria, including a company’s guidance, dividend history, regression analysis and put-call parity. The dividend may increase to 10 cents quarterly in a year, the analysts estimate.

“A dividend is definitely a catalyst,” said Brian Johnson, a Chicago-based analyst at Barclays Capital who rates Ford “overweight.” “This is putting Ford back on the radar screen of portfolio managers.”

Recovering an investment-grade credit rating will also attract investors, Johnson said.

“I think the investment rating agencies are not going to view this as inconsistent with our track back to investment grade,” Booth said.

Standard & Poor’s raised Ford’s credit rating two levels to BB+, the highest non-investment grade, on Oct. 21, saying the new contract will not impede profitability or cash generation.

“We don’t see a big chance of an upgrade in the next year,” Robert Schulz, a New York-based analyst for S&P, said today in a phone interview. “The prospects for cash-flow generation outside of North America are probably looking weaker.”

Fitch Ratings upgraded Ford to BB+ from BB on Oct. 20, and assigned a positive outlook.

Moody’s Investors Service raised Ford’s corporate rating to Ba1, one step below investment grade, on Oct. 27 and said the new UAW contract reinforces the automaker’s “strong position in North America.” Moody’s said then Ford was likely to restore a dividend and still assigned the automaker a “positive outlook.”

“This dividend is consistent with what we expected,” Bruce Clark, a New York-based analyst for Moody’s Investors Service, said today in a phone interview.

“In terms of having any real impact on the likelihood or time frame of getting to investment grade, it’s really not going to be a driver,” he said. “The big drivers are executing their existing operating plan, maintaining strong liquidity and balance sheet and addressing challenges in Europe.”

Ford had said it wouldn’t pay a dividend until it returned to investment-grade ratings. That position changed in October.

“Our shareholders have been very patient,” Booth said Oct. 20 on a conference call about the labor agreement.

That change in strategy and the cost of the dividend may delay Ford’s return to investment grade, said Jody Lurie, a credit analyst at Janney Montgomery Scott LLC in Philadelphia.

“The fact that Ford changed its plans last quarter begs the question as to how quickly it will achieve its investment- grade rating,” Lurie said today in an e-mail. “The jump from high yield to investment grade is a big one, and the company needs to prove to the agencies that it has bondholders’ best interest in mind.”

S&P and Moody’s assigned Ford a non-investment grade rating in 2005.

The Ford family, which has 40 percent voting power through a special class of stock known as Class B, didn’t influence reinstatement of the dividend, Booth said.

“This was a management decision and recommendation to the board that the board approved,” Booth said. “It wasn’t linked to any particular part of our shareholders.”

Executive Chairman Bill Ford, great-grandson of founder Henry Ford, holds 14.7 million Ford common shares and 4.86 million shares of Class B stock, according to the company’s 2011 proxy statement. His cousin, Edsel Ford II, also a director of the company, holds 3.77 million common shares and 4.84 million Class B shares, as of Feb. 1.

The 70.9 million Class B shares will receive dividend payments of about $3.54 million a quarter.

Concerns about Europe’s debt crisis and slow economic growth have weighed on the automaker’s shares.

Restoring the dividend is “a pleasant surprise in light of recent macro turmoil in Europe and general global uncertainties,” Itay Michaeli, an analyst with Citigroup Inc., wrote today in a research note. He forecasts a return to investment grade credit ratings by the middle of next year.

“I want the stock to double over the next two or three years,” said Gary Bradshaw, a fund manager at Hodges Capital Management in Dallas, which owns about 250,000 Ford shares. “That’s how we’ll make our money on Ford. The dividend is secondary.”

“The story is false,” said Ford spokeswoman Karen Hampton, confirming the board has not sanctioned any external searches for candidates, nor has any outside agency been hired to seek candidates, reported The Detroit News.

Mulally, as a guest on the “Fox and Friends” morning show Tuesday, said, “There’s always going to be speculation about succession plans but it’s absolutely not true.”

The company continues to groom a list of internal candidates for succession when the time comes, which could be in the next two years. Mulally has consistently ducked questions on the timing of his retirement. He is 66 years old.

“As Bill Ford has consistently said, we will always consider both internal and external candidates for any succession plan, but we do not have a search under way for an external CEO successor,” Hampton said.

Internal candidates include frontrunner Mark Fields, president of The Americas; Lewis Booth, chief financial officer; Joe Hinrichs who oversees Asian operations; Jim Farley, head of global marketing, sales and service; and Stephen Odell, who heads Ford of Europe.

“Any report of discussions with external candidates is false,” Hampton said.

As for suggestions that Ford could hire a chief operating officer at some point in the future to work closely with Mulally and eventually succeed him, Hampton said she cannot rule out board actions in the future, but said the automaker has no current plans to create a COO position.

Candidates for the position include at least two former Ford executives as well as two internal candidates, those people said. The internal candidates are Americas President Mark Fields, 50, and Joe Hinrichs, 45, the chief of Asian operations, reported The Wall Street Journal.

External candidates include John Krafcik, CEO of Hyundai Motor Co.’s North American arm and Phil Martens, CEO of Novelis Inc., an aluminum products company. Mr. Krafcik, 50, declined to comment; Mr. Martens, 51, declined to say if he had been contacted, adding: “I’m sure the board will make the right decision.”

A Ford spokeswoman said there is no search underway. Mr. Fields said in an interview last month that he wants the job but is satisfied with his current role. Mr. Hinrichs could not be reached for comment.

Chairman Bill Ford Jr. has repeatedly said the company would like to fill the position from within. Mr. Mulally and Mr. Ford declined to be interviewed on the matter, but Mr. Ford said in a written response to questions: “At Ford, we are fortunate to have a strong list of internal candidates and the Board is pleased to support their further development. While our preference always will be to develop talent internally, we also survey the external environment for potential candidates as a regular course of action.”

The search for a replacement for Mr. Mulally is the biggest question looming over Ford because his influence on the company has been so profound. Mr. Mulally has never hinted at when he wants to leave, but he is 66 years old and maintains his permanent home in Seattle, where he lived as the chief of the commercial business for Boeing Inc. before joining Ford five years ago.

“Having a viable succession plan to ensure business continuity is perhaps the most important duty of the Board and something we take very seriously,” Mr. Ford wrote.

Mr. Martens led product development for Ford until 2005, when he left the company. He was at former auto supplier ArvinMeritor Inc. before joining Novelis. Mr. Krafcik worked in product development for Ford for 14 years before leaving in 2004 to join Hyundai.

Mr. Fields runs Ford’s North and South American operations, the company’s principal profit center. He led the recent turnaround of North America and overcame early troubles to become one of Mr. Mulally’s top lieutenants. Mr. Hinrichs worked at General Motors Co. before joining Ford. He was in charge of manufacturing before being put in charge of Asia two years ago.

Ford filed suit Nov. 10 against Martin E. Collins, an executive who was general sales manager for Ford and Lincoln at the company’s world headquarters in Dearborn. The lawsuit says he can’t take the new job because of a non-compete agreement he signed, according to The Detroit News.

Collins told Ford on Oct. 13 that he plans to go to work for Gulf States Toyota — a Houston-based distributor of Toyota vehicles in five states — as president.

Collins was hired in March by Ford, and went to work for the carmaker May 2. He managed the entire dealer distribution network for Ford and Lincoln, and provided “ongoing feedback to senior Ford management regarding sales performance, sales trends and progress toward program and budget goals,” the lawsuit says. He also approved major market representation packages, including dealer replacements according to the suit, filed in Wayne Circuit Court and since moved to U.S. District Court in Detroit.

Collins agreed to a confidential information/non-compete agreement when he went to work for Ford, according to the lawsuit. The agreement stipulated that he not work for a competitor for two years.

Collins was paid an annual salary of $400,000 by Ford with a signing bonus of $900,000. He also received an initial restricted stock grant of shares valued at $1.5 million that was to vest over three years. He had a guaranteed bonus of $123,000 for the first year of work, and a guaranteed $127,000 stock award for the first year.

Collins told Ford he had not acquired any confidential information during his tenure at the company, something Ford described as “incredible” and “patently false.”

Ford executives told Collins if he stayed at Ford he would be assigned to a new but fully comparable position at his current pay.

Gulf States Toyota told Ford on Oct. 19 that it still planned to hire Collins and would “take as long as it takes” to do so.

On Oct. 24, Collins met with his new supervisor, Jim Farley, who is Ford’s group vice president for global marketing, sales and service. Collins told Farley he would give the new position of director of global market representation “150 percent” effort, according to the lawsuit. He began working in the new job and then resigned Nov. 1.

On Nov. 2, Ford told Gulf States Toyota that it planned to enforce its non-compete agreement. A lawyer for Gulf States Toyota, William John Bux, responded Nov. 3 by telling Ford it would not violate the non-compete agreement.

Gulf States Toyota is a wholly owned subsidiary of Friedkin Group Inc. On Nov. 7, Bux told Ford that Collins was being hired as a vice president at Friedkin Group.

Ford questions the move, and notes that the chairman and CEO of Friedkin Group, T. Dan Friedkin, also is chairman and CEO of Gulf States Toyota. “Ford believes that Collins’ purported employment as vice president of Friedkin is a sham and is in fact the equivalent executive-level employment with GST,” the lawsuit says.

Gulf States Toyota works with more than 150 Toyota dealers in Texas, Louisiana, Mississippi, Arkansas and Oklahoma.

Ford spokeswoman Karen Hampton said the company’s suit was aimed at preventing Collins from working at Gulf States Toyota and Friedkin until May 2013.

Collins’ lawyer, David Hardesty, could not immediately be reached for comment Monday. Gulf States Toyota and Friedkin also weren’t immediately available for comment.