Ford’s profit falls 39% in first quarter
Ford Motor Co.’s worldwide sales rose in the first quarter, propelled by growing strength in Asia and Europe. But weakness in North America dragged down the automaker’s profit.
Its earnings missed Wall Street’s expectations, while revenue beat them. Ford shares fell more than 3%, the most in three months.
Also Friday, Chief Executive Alan Mulally, 68, said there was no change in the plan for him to stay with the Dearborn, Mich., company at least through the end of this year.
Ford’s first-quarter net income fell 39% to $989 million, or 24 cents a share, down from $1.64 billion, or 41 cents, a year earlier.
Excluding a one-time charge of $122 million for plant closings in Europe, Ford earned 25 cents a share. That was far short of Wall Street’s expectations. Analysts polled by FactSet forecast earnings of 31 cents.
Revenue rose slightly to $35.9 billion, beating analysts’ expectations of $34.2 billion. Worldwide sales were up 6% to nearly 1.6 million vehicles.
Ford’s U.S. sales fell 3% to 580,260 in the January-through-March period, the victim of bad weather and low buyer interest in smaller, fuel-efficient cars such as the Focus and C-Max hybrid. While the F-Series pickup continued to see gains, sales of other key vehicles such as the Fusion sedan and Escape SUV were down.
Ford’s chief financial officer, Bob Shanks, said the company had forecast lower sales in North America this year as it launches 16 new vehicles in the region.
But Ford made up for those losses elsewhere. In China, first-quarter sales soared 45% to 271,321 vehicles. And European sales, long a sore point for Ford as Europe went through a recession, rose 11% to 326,000.
Ford’s Asia Pacific operations continued to thrive under the company’s ambitious expansion plans, but Ford sputtered in North America and lost money in South America and Europe. A newly created Middle East and Africa region was profitable.
The company also took a $400-million charge for warranty reserves and repair costs. Shanks said Ford regularly forecasts what its future warranty and recall costs will be and sets aside money for them. The company said those costs have been rising, so it decided to add $340 million to its reserves for vehicles from the 2008 through 2013 model years. Ford said the decision was not related to the spate of first-quarter recalls at rival General Motors Co.
Ford also spent $60 million on two recalls in the quarter.
Ford enjoyed one of the best years in its history in 2013, with a pretax profit of $8.56 billion. But it had warned that this year would be leaner as it launches a record 23 vehicles worldwide and seven plants, including four in China. The company said it still expects a full-year pretax profit between $7 billion and $8 billion.
Ford shares slid 3.3% to $15.78 on Friday. The stock has climbed 2.3% this year after rising 19% last year.
