Ford Motor Co. share price down, lower profit beats analysts’ expectations

October 25, 2014 8:56 am

Ford Motor Co. reported a decrease in earnings, but beat Wall Street’s expectations due to strong performance in China.

The American automaker stated a third-quarter decrease in net income to $835 million or $0.21 earnings per share, compared to last year’s $1.27 billion, or $0.31 per share. Excluding one-time items, earnings were $0.24 per share, beating analysts’ $0.19 average estimate.

Revenue dropped to $34.9 billion in the third quarter, a 3% decrease from last year, that is highly related to the planned shutdown of the F-150 manufacturing facility in Dearborn, Michigan. However, the company said that it is on track with the launch of the aluminum-bodied truck.

Last month Ford announced that its yearly pre-tax profit would be $6 billion, down from a prior projection of between $7 billion and $8 billion, and recall costs in North America would be $1 billion.

“If you go back to the beginning of the year, obviously we haven’t done as well as we had hoped,” said CFO Bob Shanks. “But if you go back to September when we laid out our guidance, we are right where we thought we would be.”

Q3 operating margin was 7.1% in North America and if it weren’t for the $630 million in recall costs, it would be 10.2% Mr. Shanks said. Meanwhile, rival General Motors Co. reported 9.5% margin on Thursday.

In China revenue grew 26% in the first nine months, as the company sold 813 412 cars. Star performers were its Kuga and EcoSport models from the sport-utility vehicles and the Focus and Mondeo sedans. As of October 23rd Ford officially began selling Lincoln models in China, where the company’s market share reached a record 4.7%.

“We feel extremely excited about what is going on in China,” Mr. Shanks said. “The products are resonating very well in China with consumers. The progress on Lincoln – we’ll have eight dealerships in China by the end of the year – is going very, very well.”

Ford reported Q3 pre-tax losses in South America and Europe of $170 million and $439 million respectively due to weakness in Russia. Meanwhile Asia Pacific posted pre-tax profit of $44 million, but still down from last year’s $116 million.

Pretax profit at Ford Credit, the company’s loan arm, jumped to $498 million, a $71-million increase from a year earlier, due to higher volume in nearly all financing products.

Ford Motor Co. gained 1.91% on Thursday and closed at $14.40 in New York. On Friday the stock settled 4.31% lower at $13.78, marking a one-year decrease of 22.41%. The company is valued at $53.45 billion. According to the Financial Times, the 16 analysts offering 12-month price targets for Ford Motor Company have a median target of $17.00, with a high estimate of $22.00 and a low estimate of $13.00. The median estimate represents a 23.37% increase from the last price of $13.78.

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