Tags: ford motor | profit | earnings | cars

Ford Profit Slides Less Than Analysts Estimated on China Growth

Friday, 24 October 2014 07:26 AM

Ford Motor Co., making less money while F-150 truck production is suspended, said third-quarter profit fell less than analysts had projected as the company continues to grow in China where it now outsells Toyota.

Ford, which said last month it won’t achieve its 2014 profit goals, reported net income of $835 million, or 21 cents a share, compared with $1.3 billion, or 31 cents per share, a year earlier, according to a statement. Excluding one-time costs, earnings were 24 cents a share, beating the 19-cent average estimate of 18 analysts surveyed by Bloomberg. A year earlier, Ford earned 45 cents by that measure.

Beset by rising recall costs, widening losses overseas and heavy spending on new models, Ford told investors on Sept. 29 that pretax profits this year will fall to $6 billion, short of its goal of $7 billion to $8 billion. Chief Executive Officer Mark Fields, who replaced a retiring Alan Mulally on July 1, also lowered expectations on profits for next year, as high costs to roll out the aluminum-bodied F-150 squeeze margins. Ford said today that efforts to introduce the F-150 this year are “on track.”

“With Ford, we have a management team that is no longer experiencing the halo effect of Alan Mulally running the show,” Michael Razewski, a New York-based principal at Douglas C. Lane & Associates, who oversees more than $4 billion including Ford shares, said before the results. “Now it’s about execution. You’ve got the product, go out there and sell it, don’t make mistakes, high quality, no recalls.”

Lower Output

Ford had pretax operating income of $1.41 billion in North America in the third quarter, down from $2.3 billion a year earlier. That was good for a 7.1 percent margin, down from 10.9 percent in 2013. Ford’s U.S. sales fell 0.5 percent this year through September to 1.88 million cars and light trucks, according to researcher Autodata Corp. Its U.S. market share declined to 15.1 percent from 16 percent a year earlier, according to Autodata, based in Woodcliff Lake, New Jersey.

In Ford’s Asia-Pacific region, pretax earnings slid to $44 million from $116 million last year. Ford sales in China surged 26 percent in the first three quarters of the year, as it sold a record 813,412 vehicles on strong demand for its Kuga and EcoSport sport-utility vehicles and Focus and Mondeo sedans. Last year, Ford’s sales in China surpassed Toyota Motor Corp. for a record market share of 4.7 percent.

Ford’s third-quarter automotive sales fell 3.2 percent to $32.8 billion, as the company cut North American production by 4.1 percent to 720,000 cars and trucks. The average estimate for automotive third-quarter sales was $33.4 billion.

Idled Plant

This month, Ford is to begin building the new F-150 pickup, its best seller, at a factory in Michigan to go on sale by year’s end. To install new factory tools for the truck, Ford said it will shut down its two F-150 plants for 13 weeks this year -- costing the automaker production of 90,000 of the profitable model. It will lose more production next year as it takes six weeks to convert its F-150 factory near Kansas City.

The truck sheds as much as 700 pounds (318 kilograms) to improve fuel economy, mostly by using aluminum instead of steel in its body. In 2013, Ford’s F-Series was the top-selling vehicle line in the U.S. for the 32nd consecutive year, with sales rising 18 percent to 763,402. That helped drive Ford’s North American pretax profit to a record $8.78 billion last year.

“It’s a great product that may be far less profitable than the market anticipates,” Adam Jonas, a Morgan Stanley analyst who rates Ford “underweight,” wrote of the aluminum truck in an Oct. 8 note that estimated the F-Series has accounted for more than 90 percent of Ford’s global automotive profit. “It’s difficult to make and won’t be easy to launch.”

Ford shares have fallen 12 percent since Sept. 28, the day before it said the 2014 goals weren’t attainable, and closed at $14.40 yesterday. The shares fell 6.7 percent this year before Friday.

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Ford Motor Co., making less money while F-150 truck production is suspended, said third-quarter profit fell less than analysts had projected as the company continues to grow in China where it now outsells Toyota.Ford, which said last month it won't achieve its 2014 profit...
ford motor, profit, earnings, cars
Friday, 24 October 2014 07:26 AM
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