Ford's Profit Falls 35%--Update
April 27 2017 - 8:04AM
Dow Jones News
By Adrienne Roberts and Christina Rogers
Ford Motor Co.'s first-quarter net income fell 35% over the same
year-ago period, dented by safety-recall expenses, higher
engineering and commodity costs and weaker sales in the car
company's core U.S. market.
The No. 2 U.S. auto maker on Thursday reported $1.6 billion in
net profit for the three-month period, down from $2.5 billion in
the first-quarter of 2016, when strong demand for a newly
redesigned F-150 pickup truck helped Ford post its best quarterly
operating profit in history.
Adjusted earnings per share were 39 cents in the first quarter,
beating Wall Street expectations of 36 cents.
"The results were solid but it was a tough comparison" to last
year's first- quarter results, Ford Chief Financial Officer Bob
Shanks said on Thursday.
Revenue for the first-quarter increased by 4% to $39.1 billion,
driven by a favorable mix of more profitable pickups trucks and
SUVs.
Ford confirmed full-year operating guidance of $9 billion for
2017.
First-quarter adjusted pretax profits were down 42% to $2.2
billion as the company also faced headwinds from a stronger U.S.
dollar and lower sales in China, the world's largest auto
market.
Operating profits were also dinged by a $295 million recall
expense disclosed in March covering nearly a half-million vehicles
with fire risks and faulty door latches. This was the second time
in less than a year that safety concerns have hurt the bottom
line.
Ford is coming off one of its most profitable periods in history
with North America benefiting from two consecutive years of record
U.S. car and truck demand.
Ford earned a historically high $10.4 billion in operating
profits last year but results were down slightly from 2015's record
of $10.8 billion.
Now, amid plateauing U.S. auto sales and heavy discounting
across the industry, the car maker is struggling to keep its profit
momentum going. At the same time, Ford is investing heavily in
electric cars and autonomous vehicles as a way to diversify beyond
its auto-making business and catch up to rivals in the automotive
industry and new tech startups.
Operating profits for Ford's North American operations were $2
billion in the first-quarter, down 35% compared with the same
period a year ago.
Margins also slipped in the first-quarter to 8.3% in the
company's core North American business, from a lofty 12.9% a year
ago.
In Europe, Ford posted a pretax profit of $176 million, compared
with $434 million in the year-ago period with exchange rate and
Brexit headwinds offsetting higher sales volumes.
In Asia Pacific, Ford recorded a $124 million operating profit,
down from $220 million a year ago, as the auto maker continued to
struggle with cooling new-car demand and the expiration of a tax
subsidy on small-engine vehicles last year.
Ford's operating loss in South America continued, with the auto
maker reporting $244 million in red ink for the just-ended quarter,
compared with $256 in the year-ago period.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com and
Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
April 27, 2017 07:49 ET (11:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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