Tags: Ford | automobile | sales | profits

Ford Raises Profit Forecast as North America Leads Earnings Beat

Wednesday, 24 July 2013 07:33 AM

Ford Motor Co., the second-largest U.S. automaker, raised its full-year pretax profit forecast after second-quarter earnings climbed more than estimates as the Focus compact and Fusion sedan led a stable of competitive cars.

Ford also raised its outlook for automotive operating profit margin and automotive cash flow for the year. The company reported net income of $1.23 billion, or 30 cents a share, in a statement distributed at its headquarters in Dearborn, Michigan. Excluding some items, the per-share profit was 45 cents, exceeding the 37-cent average estimate of 17 analysts surveyed by Bloomberg. The result compared with net income of $1.04 billion, or 26 cents, a year earlier.

Surging demand for Focus in China and Fusion in the U.S. shows Chief Executive Officer Alan Mulally’s efforts to improve Ford’s lineup are paying off. Attractive cars from Ford, General Motors Co. and Chrysler Group LLC and their dominance in the resurgent full-size pickups segment drove all three to gain U.S. market share in the first half for the first time since 1993.

“The car lineup is gaining a foothold, increasing volume and it’s competitive,” Kevin Tynan, an auto analyst for Bloomberg Industries in Skillman, New Jersey, said before Ford released its results. “It’s positioning them to expand their customer base, create loyalty for the badge, retain buyers and then move them up into higher price points.”

Ford raised its forecast for its annual pretax profit to equal or more than last year’s $8 billion. The company previously projected it would be in line with last year’s results.

Raised Forecasts

The automaker raised its annual automotive operating margin forecast to about equal to last year’s 5.3 percent, after previously estimating the figure could be in line with or less than the 2012 result. The company also said automotive operating cash flow would be “substantially” more than last year’s $3.4 billion.

Deliveries of the Focus increased 69 percent in China during 2013’s first six months, positioning Ford as one of the fastest-growing carmakers in the world’s largest auto market. The Fusion family car climbed to the No. 7 best-selling model in the U.S. during the first half after ranking outside the top 10 a year earlier, according to researcher Autodata Corp.

Housing, Energy

The reviving U.S. housing sector and record energy production also are fueling demand for trucks, a segment Ford’s F-Series has led for three decades. Those gains combined to boost automotive sales in the second quarter to $36 billion, topping the $35.1 billion average estimate of 11 analysts.

Ford’s U.S. market share rose by 0.8 percentage points in the first half to 16.5 percent, according to Automotive News Data Center. Market share for Chrysler grew by more than 0.1 point to 11.6 percent. GM, based in Detroit, raised its share by less than 0.1 point to almost 18.2 percent.

Optimism about the U.S. automakers’ product renaissance and accelerating sales in their home market propelled Ford and GM shares this month to their highest since early 2011. Chrysler, based in Auburn, Hills, Michigan, is majority owned by Fiat SpA. The Turin, Italy-based company’s shares surged 59 percent this year through yesterday in Milan trading.

Ford earned a $2.3 billion quarterly profit in North America during the three months ended June 30. Its second-quarter operating margin of 10.4 percent in the region compares with 10.2 percent a year earlier.

European Struggles

Global results for Ford are being tempered by struggles in Europe, where a worsening economic slump is dragging industry sales to the lowest in two decades. The operating loss for Ford’s Europe operations narrowed to $348 million during the second quarter, from $404 million a year earlier.

Ford forecast its annual loss in the region will be in line with last year’s deficit of about $1.8 billion, an improvement from its prior projection of about $2 billion. The company still plans to break even in Europe by 2015, Stephen Odell, the head of the company’s Europe operations, told reporters earlier this month. The industry in Europe is “starting to show signs of stability,” he said.

Ford’s Asia Pacific Africa operations earned $177 million in the quarter after losing $66 million a year earlier. The automaker is introducing 15 new vehicles in China by 2015 to try to catch up with market leaders GM and Volkswagen AG.

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Ford Motor Co., the second-largest U.S. automaker, raised its full-year pretax profit forecast after second-quarter earnings climbed more than estimates as the Focus compact and Fusion sedan led a stable of competitive cars.
Wednesday, 24 July 2013 07:33 AM
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