Ford Credit Europe (FCE) has reported a sharp
fall in first-quarter profit, blaming a weak pound and a smaller
fleet of vehicles following disposals by its parent company, Ford
Motor Company.

Pretax profit for the quarter to March 31 was
£68m, down 23% from £88m in the same quarter a year earlier, FCE
said in results announced last week.

An FCE spokesman said that Ford’s sale of car
brands Jaguar and Land Rover in 2008, and Volvo last year, had
shrunk the size of FCE’s car fleet. This caused a fall in revenues
from old and new car-finance contracts.

“The decrease in PBT when compared to Q1 2010
mainly reflects the adverse impact of fair value adjustments to
financial instruments and foreign exchange, the impact of a lower
receivable base and reductions in amounts released from credit loss
reserves,” FCE said in a statement.

These effects were partially offset by
improved credit loss performance, with both reduced credit losses
and strong recoveries from previously impaired assets, FCE
added.

FCE’s average loans and advances increased
during the first quarter, mainly reflecting the normal seasonal
increase in dealer wholesale receivables and the impact of the
stronger Euro during the period, it said.

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