Ford's Profit Falls 35%--4th Update
April 27 2017 - 1:35PM
Dow Jones News
By Adrienne Roberts and Christina Rogers
Ford Motor Co.'s first-quarter profit fell 35% from a year
earlier amid higher costs and weaker U.S. sales, sending the stock
down 1.7% in early afternoon trading.
The No. 2 U.S. auto maker on Thursday reported profit of $1.6
billion, down from $2.5 billion in 2016's first period, 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 latest quarter,
beating analysts' consensus of 36 cents. Analysts cited
stronger-than-expected earnings in North America and at Ford
Credit, the company's financing arm.
"The results were solid, but it was a tough comparison" to last
year's first quarter, Ford Chief Financial Officer Bob Shanks said
on Thursday.
The Dearborn, Mich., auto maker faced headwinds at home and
abroad with lower sales in China, an unfavorable exchange-rate
impact in Europe because of Brexit and a tougher market in the
U.S., where new-car demand is cooling after seven years of
uninterrupted growth.
Mr. Shanks described the just-ended quarter as likely Ford's
"toughest" for this year with results expected to be flat "in
aggregate" over the remaining three quarters.
Revenue for the first quarter rose 4% to $39.1 billion, driven
by a favorable mix of pickup trucks and sport-utility vehicles.
Ford is coming off one of its most profitable periods in history
with its North American business benefiting from two years of
record sales growth for the U.S. auto industry and surging demand
for its highly lucrative trucks and SUVs amid low gasoline
prices.
Ford earned $10.4 billion in operating profit last year, though
results were down slightly from 2015's record of $10.8 billion.
Company executives are forecasting a leaner profit this year,
confirming on Thursday full-year operating guidance of $9
billion.
Ford plans to cut $3 billion in costs this year and expects
profit to rebound in 2018, driven by continued strength in the U.S.
pickup-truck market, the rollout of two new full-size SUVs and
improving results at Ford Credit.
Ford's first-quarter adjusted pretax profit fell 42% to $2.2
billion, 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.
Operating profit for Ford's North American business was $2
billion, down 35% from the same period a year earlier.
Margins slipped in the first quarter to 8.3% in the company's
core North American business, from a lofty 12.9% a year earlier.
While transaction prices were up $1,971 per vehicle on strong
demand for Ford's heavy-duty trucks, U.S. sales fell 4% in the
first quarter and market share shrank.
Higher interest rates and a steady decline in used-car values
are also hurting vehicle affordability among U.S. consumers and
making it more difficult for auto makers to continue offering the
cheap leases that helped drive U.S. sales.
In Europe, Ford posted a pretax profit of $176 million compared
with $434 million a year earlier, with exchange-rate and Brexit
headwinds offsetting higher sales volumes.
In Asia Pacific, Ford recorded a $124 million operating profit,
down from $220 million, as the auto maker contended with cooling
new-car demand and the expiration of a tax subsidy on small-engine
vehicles last year.
Ford's operating losses in South America continued, with the
auto maker reporting $244 million in red ink, compared with $256
million in last year's first quarter.
Write to Adrienne Roberts at Adrienne.Roberts@wsj.com and
Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
April 27, 2017 13:20 ET (17:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Ford Motor (NYSE:F)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ford Motor (NYSE:F)
Historical Stock Chart
From Sep 2023 to Sep 2024