Wayne Gerdes - CleanMPG - Oct. 24, 2014
Detroit -- Ford reported it earned $835 million in the third quarter, down 34% from $1.272 billion earned in the 3rd quarter of 2013. The company earned a pre-tax profit of $1.18 billion in the third quarter down 54 percent from the 2.589 billion it booked in the third quarter of 2013.
On a more positive note, it was the company’s 21st consecutive profitable quarter and the $0.24/share earnings beat street estimates of $0.19.
Revenue fell slightly from $35.8 to $34.9 billion a year with all regions experiencing pre-tax profits declines.
Globally Ford sold 1.49 million vehicles, down 57,000 from the 1.537 million vehicles sold in the third quarter of 2013.
Truck centric sales in North America generated the bulk of the company’s profit with before-tax earnings of $1.41 billion, a drop from $2.296 billion from a year ago. $650 million in recall costs accounted for a large percentage of the decline.
Regional Results
North America continues to benefit from sales of Ford’s most profitable vehicles. Namely the F-150. Third quarter U.S. market share was 14.1 percent, down 0.8 percentage points from a year ago.
For the full year, Ford continues to expect North America’s pre-tax profit to be lower than 2013 and operating margin to be at the low end of the 8 percent to 9 percent range.
Europe earnings continue to drag on Ford’s bottom line with most of the shortfall due to Putin’s BS in Russia.
Ford’s Europe 20 market share stood at 8.4 percent in the third quarter, up 0.4 percentage points from a year ago.
In the quarter, Ford lost $439 million USD on the Continent. For the full year, Ford continues to expect Europe to incur a loss of about $1.2 billion, an improvement compared with 2013 but the hemorrhaging continues. Ford said the expected European profit in 2015 will not be met.
South America was also a disappointment with a loss of $170 million in the quarter, a decline of $330 million from the third quarter of 2013. Wholesale volume and revenue decreased by 21 percent and 17 percent respectively with weak currencies and high inflation said to be the cause.
For the full year, Ford continues to expect South America to incur a loss of about $1 billion.
Ford continues to invest for growth in Asia Pacific through both new and expanded plants, new products and the introduction of Lincoln in China.
Asia Pacific reported a third quarter pre-tax profit of $44 million, a decrease of $72 million from a year ago. The decrease was also blamed on an unfavorable exchange rate and the company’s continued investment in five new plants that will come on line over the next nine months.
In the third quarter, wholesale volume was up 5 percent from a year ago, and net revenue, which excludes the company’s China joint ventures, grew 3 percent. Wholesale volume in China increased 10 percent from a year ago.
Ford estimates the third quarter SAAR for the region at 38.9 million units, up 1.8 million units from a year ago, with China making up the brunt of the increases.
Ford’s market share at 3.6 percent was a record for the quarter, 0.2 percentage points higher than a year ago. The improvement was driven by China, where Ford’s market share improved 0.4 percentage points to a record 4.7 percent.
For the full year, Ford continues to expect Asia Pacific to earn a pre-tax profit of about $700 million, which is higher than a year ago.
Middle East & Africa reported a loss of $15 million in the third quarter, a $10 million improvement from a year ago.
Ford’s full-year guidance for Middle East & Africa remains unchanged, with the region expected to be about breakeven.
Full Year Guidance
Ford reaffirmed its full-year pre-tax profit outlook at about $6 billion, excluding special items, as it continues its aggressive implementation of its One Ford plan.
Ford was trading at 13.80, down 4.17% in late afternoon trading.
Ford’s 3Q Down 34 Percent
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