Ford Motor Company Investments Paying Off, Q1 Earnings Top View
- Author: Rita Burton Apr 30, 2017,
Apr 30, 2017, 1:22
Ford's earnings per share in the first quarter is 40 cents, down from 61 cents a year earlier.
First-quarter adjusted pretax profits were down 42% to $2.2 billion as the company also faced headwinds from a stronger US dollar and lower sales in China, the world's largest auto market.
Chief Financial Officer Bob Shanks told reporters at the company's headquarters in Dearborn, Michigan, that Ford's higher costs for 2017 were incurred largely in the first three months, its "toughest quarter" for the year.
The company had to spend $295 million on two safety recalls, one for engine fire risk, and another for faulty door latches.
Despite rough first quarter results Ford did say it expects a profit before taxes of $9 billion during 2017.
Ford Motor Co.'s first-quarter profit fell 35% from a year earlier amid higher costs and weaker US sales, sending the stock down 1.7% in early afternoon trading.
The drop in net profit was due to the recall costs and investments in future products. Full-year cost efficiencies of about $3 billion are expected to offset costs outside of investments in emerging opportunities, the company said in its shareholder letter.
Ford's profit margins during the quarter fell 4.4 percentage points to 5.4 percent. While transaction prices were up $1,971 per vehicle on strong demand for Ford's heavy-duty trucks, US sales fell 4% in the first quarter and market share shrank.More news: Tesla Model S loses top ranking from Consumer Reports
Ford earned a historically high $10.4 billion in operating profits a year ago but results were down slightly from 2015's record of $10.8 billion.
David Kudla, CEO and chief investment strategist with Mainstay Capital Management, said plateauing sales will begin to fall in 2017, which would hurt companies' bottom lines, but regulatory changes from the Trump administration and strong truck and SUV sales could help companies remain healthy.
The automaker on Thursday reported $1.6 billion in profit compared to $2.4 billion in the year-ago period. Revenue for the quarter rose to $39.1 billion from $37.7 billion a year earlier. USA retail share was up, reflecting higher share in trucks, utilities and Lincoln.
Ford shares fell 13 cents, or 1.1 percent, to close Thursday at $11.47.
A favorable mix of more profitable trucks and SUVs drove a 4 percent increase in revenue.
First-quarter adjusted earnings fell by 42 percent, dragged down by wagers on battery-powered and autonomous autos.
"Basically, the cost increase for the full year has happened in the first quarter", he said. The company led by Elon Musk has posted only two quarterly profits in its history, yet its market value surpassed Ford's this month.