Ford exits the year’s first-quarter with a strong showing in the key North American market, posting a pretax operating profit of $2.1 billion, up from $1.8 billion in like-2011.

Globally, the results weren’t so rosy, with pretax operating profits down $544 million from year-ago to $2.3 billion. Global net income was $1.4 billion, a decrease of 1.2 billion from year-ago. Ford only breaks out net income on a global basis, not region by region.

Europe was the primary culprit for the shortfall, with the region reporting a pretax operating loss of $149 million compared with a profit of $293 million year-ago.

Europe’s headwinds are fierce, including sovereign debt issues, overcapacity and weak vehicle demand. Chief Financial Officer Bob Shanks says conditions are unlikely to improve in the region in the next four to five years.

“Europe is looking like the U.S. in 2008 and 2009,” he says in a conference call with analysts and reporters. “It’s a real tough environment.” Not only is demand down, but so is the number of customers bringing vehicles in for repair, indicating a depressed economy.

Although Ford does not expect economic conditions to improve near-term, Shanks says the company is taking steps to lessen the financial impact to its bottom line by adjusting inventory levels to meet actual demand, improving margins and mix and shoring up its overall cost structure.

“Europe is a very big, important market,” he says. “We have a challenge in front of us to create a business structure. We’re going to attack it piece by piece.”

South America, a region where Ford anticipates future growth, reported a pretax operating profit of $54 million, compared with $210 million year-ago.

While the situation is not as dire as it is in Europe, there are hurdles to overcome in the region. Increased competition, excess capacity and conflicts with the free-trade agreement between Brazil and Argentina are issues that must be addressed.

“We’re going to be completely replacing our product lineup with global products,” Shanks says. “That will have a positive impact on the brand, and we’re working to strengthen the brand with dealers and increasing advertising and promotion.”

Ford experienced a letdown in the Asia/Pacific and Africa regions in the first quarter, posting a pretax operating loss of $95 million, compared with a profit of $33 million in like-2011.

The auto maker says the decline reflects higher costs associated with continued investment for future growth, a condition that was exacerbated by the next-generation Ranger pickup’s slower-than-expected global launch caused by severe flooding in Thailand.

Ford expects its financial situation to improve in the region once new plants come on line and new products are introduced. For example, the auto maker recently opened up a new factory with joint-venture partner Mazda in Chongqing, China, which should boost its passenger-car capacity in the country by one-third, to 600,000 units.

North America remained strong for Ford in Q1, but there are concerns. Shanks reiterates comments made by Mark Fields, president-the Americas, at the New York auto show about the auto maker’s lack of capacity in the region to meet demand. Ford is adding shifts and increasing line speed at some plants, but those changes don’t take effect until later in the year.

“In 2006, we took out tremendous capacity, and we had a point of view about when (consumer demand) would come back and how to match demand with capacity,” he says. “We had plans in place, but they were off by a quarter or two. We’re on track by the end of the year to be in good shape for next year’s demand.”

The capacity constraints are expected to erode Ford’s U.S. market share, which stood at 16.5% in 2011, Shanks says.

Ford ended the first quarter with $22 billion in automotive gross cash, up from $21.3 billion year-ago. Total automotive debt totaled $13.7 billion.

In an effort to “de-risk” global funded pension plans, Ford today says it will offer 90,000 eligible U.S. salaried retirees the option of receiving a voluntary lump-sum pension payment. If an individual elects to receive the payment, Ford’s pension obligation to that person will be settled. Payouts will start later this year and be funded from existing pension plan assets.

Shanks says it is impossible to predict how many retirees will opt for the lump-sum payment.

“We don’t know what the take rate will be because this has never done by a company of this size before. This is a really significant step forward to improve the risk profile of the company.”