Ford Posts 35% Drop in Profit for First Quarter

30 April, 2017, 01:17 | Author: Celia Hoffman
  • Ford truck

Analysts had, on average, expected earnings per share for the quarter of 35 cents.

The No. 2 US automaker had warned investors in late March that higher expenditure and lower sales volumes would have an impact on its quarterly earnings.

Ford, one of the Calumet Region's largest employers, reported profits plunged 35 percent to $1.6 billion in the first quarter, down from $2.5 billion during the same period past year. Those higher costs were due to a $US467 million increase in warranty costs, a $US176 million increase in commodity costs, and a $US253 million increase in product launch costs.

In 2016, the profit for the automaker was $2.4 billion, the highest profit for a quarter by the company on record. Those actions were in addition to a recall last fall of 2.4 million vehicles to fix door latches which cost Ford $600 million.

Ford said it still expects adjusted pretax profit to be about $9 billion in 2017.

Total revenues for the quarter, however, increased 4 percent to $39.15 billion from last year's $37.72 billion, driven by favorable mix.

Ford delivered 1.7-million vehicles globally in the first quarter, while Daimler delivered 754,300, of which 568,100 were Mercedes-Benz cars.

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Ford earned a historically high $10.4 billion in operating profits previous year but results were down slightly from 2015's record of $10.8 billion.

"Tesla is just all about the long-term potential of the company", David Whiston, an analyst with Morningstar Chicago, said by phone ahead of Ford's earnings release.

In a March regulatory filing with the U.S. Securities and Exchange Commission, Ford projected its first-quarter earnings per share to come in between 30 cents and 35 cents.

Ratings agencies have warned of worsening credit and there are concerns that millions of almost new leased vehicles due to flood the market over the next couple of years will further depress used-car values and hurt US automakers' sales.

Cash flow from financing activities was $1,120 million for the quarter, down 73.83 percent or $3,159 million, when compared with the past year period.

Transaction prices for its new cars and trucks rose $1,971 year-over-year, according to Ford, compared with an industry average increase of $506.

Shares of Ford rose by as much as 1.9% to $11.82 in premarket trades this morning. In Europe, in a recovering market profit before taxes was $176 million and in Asia $124 million. Analysts attributed the beat to stronger-than-expected earnings in North America and at Ford Credit, the company's financing arm.


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