Ford's second quarter net profit up 6 per cent to $1.3 billion as Europe makes money again
DEARBORN, Mich. - Ford Motor Co. beat Wall Street's expectations in the second quarter as it chalked up a record profit in North America and made money in Europe for the first time in three years.
But things will get leaner in the second half as Ford closes one of its U.S. pickup truck plants to prepare for the launch of its new aluminum-sided F-150. Marketing expenses for new products, like the truck and the Ford Edge in the U.S. and the Mondeo and Focus sedans in Europe, will also take a bite out of earnings.
Ford, which earned $3.9 billion before taxes in the first half of this year, confirmed it expects full-year earnings of $7 billion to $8 billion. That's down from $8.6 billion in 2013.
"It's really a set-up year for a step up in the business in 2015 and beyond,"Chief Financial Officer Bob Shanks told media Thursday morning at Ford's Dearborn headquarters.
For the April-June period, Ford's net income rose 6 per cent to $1.3 billion. The profit, of 32 cents per share, was up from 30 cents per share in the same period a year ago.
Excluding separation costs in Europe and a $329 million impairment charge for its money-losing joint venture in Russia, Ford earned 40 cents per share. That beat analysts' forecast of 36 cents, according to FactSet.
Ford's revenue fell 1 per cent to $37.4 billion, but topped analysts' expectation of $36.2 billion.
Ford shares crossed $18 for the first time since early 2011 in morning trading, and were up 20 cents to $17.98 at midday.
Mark Fields, a company veteran who became Ford's CEO on July 1, told analysts and media on a conference call that he intends to continue the strategy he helped develop with former CEO Alan Mulally. That means focusing on profitable growth, working closely between regions and speeding up vehicle development time.
"My message to our team internally, and now externally, is one of continuity but also acceleration of the plan," Fields said.
The results were less rosy at Ford's crosstown rival, General Motors Co., which posted a net profit of $190 million after absorbing $1.5 billion in recall-related costs. GM's shares fell nearly 4 per cent to $35.96 in midday trading.
Ford's worldwide sales fell 1 per cent to nearly 1.7 million. Sales were down in every region except Asia Pacific, where they jumped 21 per cent thanks to strong demand for new vehicles like the Kuga SUV in China. Ford made up for that by limiting production and commanding higher prices.
Ford reported its highest-ever pretax profit of $2.4 billion in North America. The company's U.S. sales fell, but Shanks said that was offset by lower costs for materials such as steel and increases in sales of parts and accessories.
Ford plans to close its Dearborn truck plant for eight weeks beginning in August. The new F-150, with aluminum sides that shave 700 pounds off the truck's weight, is scheduled to go on sale in the fourth quarter.
In Europe, Ford made $14 million, its first quarterly profit since 2011. Ford expects Europe to be profitable for the full year in 2015.
In Asia, Ford's profit jumped 22 per cent to $159 million. Ford said its market share in the Asia Pacific region hit a record 3.7 per cent.
Ford lost $295 million in South America, where its sales were down 23 per cent.
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