Ford feels pinch of difficult 3Q
DEARBORN, Mich. - Troubles in Ford Motor Co.’s home market — including slowing U.S. sales, a massive recall and the difficult launch of new heavy-duty pickups — are hurting the company’s bottom line.
Ford said Thursday its net income plunged 56 percent to $957 million in the third quarter. The earnings of 24 cents a share compared with earnings of 55 cents a share in the July-September period a year ago.
Dearborn-based Ford beat Wall Street’s expectations, with adjusted earnings of 26 cents a share; analysts polled by FactSet had forecast 20 cents. But that didn’t do much to offset concerns Ford is headed for a rough patch. The company has already announced temporary plant shutdowns in North America to curb production, and plans more actions in the fourth quarter.
“I would call our approach realism. Not optimism, not pessimism. Realism,” CEO Mark Fields said in a conference call with analysts. “We don’t see a recession on the horizon but we see a marketplace that, from a cycle standpoint, has matured.”
North America, with its record-setting U.S. sales and love affair with profitable SUVs and pickups, has been Ford’s cash cow in recent years. Ford earned a record $10.8 billion pretax profit in 2015; $9.3 billion of that came from North America.
But after an unprecedented six-year climb, U.S. sales are peaking. Ford’s North American sales were down 11 percent in the quarter, and revenue dropped 8 percent. Next week, Ford will temporarily cut one of three shifts in Kansas City, Mo., making the F-150 pickup, America’s best-selling vehicle.
“What’s happening to the company is really about what’s happening in North America,” Ford Chief Financial Officer Bob Shanks said.
Ford still expects a full-year pretax profit of $10.2 billion, but that’s down from its initial forecast of $10.8 billion. Ford has said its profits will likely fall next year before rebounding in 2018.
Ford had some big one-time costs in the third quarter. The company spent $600 million — $40 million less than it initially projected — to replace faulty door latches on 2.4 million cars and trucks. It also launched production of its first all-new Super Duty pickup in 18 years, with all-aluminum sides that required a complete revamp of its Kentucky truck plant.