Despite a 22% decline in its third-quarter profit, Ford (F) raced ahead of Wall Street expectations and raised its full-year outlook on a brighter forecast for the European auto market.

The second-largest U.S. automaker is now looking to post a pretax profit higher than last year’s $8 billion, while losses in Europe are expected to narrow. Ford previously estimated both figures would remain level year-over-year.

Ford also upped its margin view, projecting to top its 2012 automotive operating margin of 5.3%.

Shares jumped 2.9% to $18.03 in pre-market trading Thursday. The stock was already up 35.3% on the year as of Wednesday’s close.

The Dearborn, Mich., company’s net income fell to $1.27 billion, or 31 cents a share, from $1.63 billion, or 21 cents a share, in the year-ago period. The latest period included $250 million in European restructuring charges and another $145 million in charges related to employee pensions.

Excluding those one-time items, Ford logged adjusted earnings of 45 cents a share to beat the 38 cents expected by analysts.

Revenue climbed 12% to $36 billion, which topped estimates by about $1 billion.

The third quarter marked the first time in more than two years that Ford saw a combined profit in its three international regions.

Ford’s North American pre-tax profit was roughly flat at $2.3 billion. The car maker had a $159 million pre-tax profit in South America, well above the $9 million reported last year. Earnings nearly tripled in Asia Pacific and Africa to $126 million.

In Europe, Ford narrowed its losses to $228 million from $470 million. The company said revenue in the lagging European auto market was up 12% amid higher volume.

Earlier this month, Ford bucked a downward trend in the industry to post a 5.8% increase in September U.S. sales. Most of its rivals saw weaker demand year-over-year since Labor Day sales were included in August sales reports.

Ford’s U.S. sales are up 12% through the third quarter.

The automaker did cut its anticipated fourth-quarter production in North America to 770,000 vehicles, 15,000 fewer than its prior estimate. But that would still reflect an improvement of 35,000 vehicles compared to a year ago.

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