Ford shares slip as profit falls to $1.6 billion in third quarter
Ford Motor Co. posted a big third-quarter profit, but it was slightly less than in the same period a year earlier as losses in Europe and Asia dragged earnings down.
Ford said it had net income of $1.6 billion, about 2% less than in the same period a year earlier. Ford’s profit amounted to 41 cents a share, down from 43 cents in the year-earlier period.
The company was profitable in North America and South America but lost money in other regions of the world.
Earnings also fell because of how the automaker accounts for hedging against rising commodity prices.
Without those hedge losses, which are likely to be made up in future quarters as deliveries are taken of the underlying commodities, earnings would have been on track at about 50 cents a share, said Brian Johnson, an analyst with Barclays Capital. “Ford delivered a quarter that was stronger than on first glance,” he said.
Revenue rose by $4.1 billion, or 14%, to $33.1 billion.
“We delivered solid results for the third quarter despite an uncertain business environment,” said Alan Mulally, Ford’s chief executive.
Ford’s shares closed down 56 cents, or 4.51%, at $11.87.
“Overall, it was a respectable quarter, but there was nothing there to get the stock moving,” said Matt Collins, an analyst with Edward Jones.
He said Ford remains “on a gradual path to recovery, although the path is a bit bumpy.”
The automaker continues to make progress improving its balance sheet. Ford sliced its debt to $12.7 billion by the end of the third quarter from $26.4 billion at the end of the same period a year earlier.
Company officials said Ford’s financial health has improved to the point that it is considering reinstating a dividend, but they did not provide details on the timing.
The company borrowed heavily to restructure its business going into the recent recession. The strategy helped Ford, which avoided the bankruptcies and government bailouts that saved General Motors Co. and Chrysler Group, but left the automaker with heavy debt that it has been working to pay off.
Last week, Standard & Poor’s Ratings Services raised its corporate credit rating on Ford and the automaker’s lending arm to BB+ from BB-. That puts the company just one notch below an investment-grade rating, which is an important measure of corporate health and would reduce the automaker’s borrowing expenses.
Ford’s “new four-year labor contract with the United Auto Workers has been ratified; we believe the contract will allow for continued profitability and cash generation in North America,” Standard & Poor’s said.
But the automaker suffered a setback this week when Ford fell to 20th place among 28 brands rated for vehicle reliability by Consumer Reports, an influential guide for car buyers. Last year Ford was 10th.
Consumers have complained about problems with the new transmission systems in the company’s Fiesta and Focus models. The automaker also was hurt by glitches with the MyFord Touch information and entertainment system on many of its models.
Most of the problems are associated with software issues, and Ford has identified the fixes and is rolling them into both existing models and new products, Mulally said.
“I think we will be clearly moving back up and delivering on our brand promise on quality going forward,” he said.
