Ford's Profit Falls 35%

28 April, 2017, 02:20 | Author: Valerie Burke
  • Ford is seen during the 87th International Motor Show at Palexpo in Geneva

The Dearborn, Michigan-based automaker saw its net income fall by 35% to US$1.6bn, with adjusted pre-tax profit coming in at US$2.2bn and earnings per share of US$0.39, above market expectations for US$0.35 per share.

Despite rough first quarter results Ford did say it expects a profit before taxes of $9 billion during 2017.

Revenue for the first quarter rose 4% to $39.1 billion, driven by a favorable mix of pickup trucks and sport-utility vehicles.

Ford's total vehicle sales were worse than industrywide deliveries of cars and light trucks, which declined 1.5% to 4.03 million, according to Autodata Corp.

Ford has invested $1 billion in artificial intelligence company Argo AI.

Shanks said Ford's own used-car values at its finance arm were down 7 percent compared to the same quarter in 2016, but said customers' credit scores remained high and we "feel really good about where credit is". Ford said it had 14.1% of the North American market, down 0.5 points from past year.

Ford's costs during the first quarter were hurt by two recalls in North America, one to replace potentially faulty side door latches and the other for under-hood fire risks.

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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.

"We're having one foot in today and one foot in tomorrow", Chief Executive Officer Mark Fields said Thursday on Bloomberg Television. Ford reported earnings per share of 40 cents, down from the first quarter of past year but better than the 35 cents analysts had expected. The company led by Elon Musk has posted only two quarterly profits in its history, yet its market value surpassed Ford's this month.

Ford Motor kept costs in check as it began laying down a bet on an age of electric and self-driving cars, buoying profits that should improve later this year.

Shanks said that the remainder of 2017 will be about even or better than Ford's financial performance in 2016.

North America produced the most profits for the automaker even though profits fell in the region to $2 billion in comparison to $3.1 billion the prior year.

Pricing gains will be tougher to come by as the year goes on, Shanks said. "Plus (first quarter 2016) was a phenomenal quarter across the board for the industry in the US and will be an nearly unfair comparison".

Automotive revenue for the quarter rose to $36.5 billion from $35.3 billion a year earlier.

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