Americans’ love of SUVs underpins Ford’s results
FORD Motor Company reaped the benefits of Americans’ love of sport utility vehicles (SUV) and pick-ups in the first quarter, posting record net income of $2.5 billion (R36bn) that exceeded analysts’ estimates on the back of the popular models.
Earnings excluding onetime costs were 68 cents a share, Ford said yesterday. That beat the 48c average estimate of 16 analysts surveyed by Bloomberg. Net income doubled to 61c a share, from $1.15bn, or 29c a share, a year earlier, when F-150 pick-up production was limited.
“The first quarter was an absolutely terrific start to the year,” chief executive Mark Fields said. “An all-time record for the company, with very strong performance across the business.”
Ford’s consistent profits have not won over investors, amid concern that the US automotive market peaked last year at a record 17.5 million deliveries. The car maker’s shares fell 9.1 percent last year and have continued to decline, even as its SUV sales in the US rose 16 percent in the quarter.
Ford posted quarterly pretax earnings of $3.8bn, a record for any quarter, aided by a record North American margin of 12.9 percent.
“When people think there’s no more growth, no matter what you do, you don’t get credit for it,” said David Whiston, an analyst at Morningstar in Chicago, who rates Ford the equivalent of a buy.
“It’s unfortunate because I don’t see a recession imminent for the US (automotive) indus- try. They’ll be printing money in North America for quite a while. It could be several years,” he added.
The shares jumped as high as $14.10 before regular trading in New York yesterday. They declined 3.1 percent this year until Wednesday.
Chief financial officer Bob Shanks rejected Wall Street’s view that the US automotive market had peaked. “I don’t buy into that,” he said yesterday morning at the company’s headquarters in Michigan.
“I know that’s what the market is pricing in; they’re also pricing in a recession. There’s nothing that we see in the leading economic indicators to suggest that anything like that is on the horizon.”
Ford tried to address negative investor sentiment last month when Shanks told analysts the car maker could withstand a 30 percent drop in US vehicle sales and remain profitable.
“The mantra of ‘as good as it gets’ will rule the day,” Brian Johnson, an analyst at Barclays, wrote in an April 14 note. He rates the shares the equivalent of a hold.
In the Asia-Pacific region, pretax profit was $220 million, up from $105m last year. Ford’s sales in China grew 14 percent to 314 454 vehicles.
Ford would not make as much money in the second half of the year because of rising costs to introduce redesigned Super Duty pick-ups and because production would be lower for scheduled factory shutdowns this summer, Shanks said.
Ford has posted quarterly pre-tax earnings of $3.8 billion, a record for any quarter.