Strong truck sales boost Ford profit
DEARBORN, MICHIGAN: Pickup trucks helped Ford Motor Co to a strong finish in the third quarter despite lower global sales.
The Dearborn-based automaker said yesterday that its net income rose 63% to $1.6 billion in the July-September period. The earnings of 39 cents per share handily beat Wall Street’s expectations. Analysts polled by FactSet forecast earnings of 33 cents per share.
Ford’s revenue rose 1% to $36.45 billion. Automotive revenue of $33.6 billion also topped analysts’ forecasts.
With those results under its belt, Ford raised its full-year earnings estimate to $1.75 to $1.85 per share, up from $1.65 to $1.85. That compares to $1.76 per share in 2016.
Ford’s overall sales fell 2% to 1.5 million cars and trucks. Sales were lower in China, North America and the Middle East; they rose in Europe and South America.
But the company earned more thanks to booming sales of high-margin trucks, which got an added boost in the US after the season’s hurricanes.
US sales of F-Series pickups were up 14% during the quarter. Ford said buyers paid an average of $45,400 per truck, up $2,800 from the same period a year ago.
“More buyers are springing for luxury packages on their trucks to get extras like heated seats and backup cameras,’’ chief financial officer Bob Shanks said.
The third quarter was Ford’s first full quarter with new CEO Jim Hackett at the helm.
Hackett, the former CEO of furniture maker Steelcase Inc, was leading Ford’s new mobility efforts until May, when he took over the top job after CEO Mark Fields was ousted.
Earlier this month, Hackett told investors that Ford planned to cut $14 billion in costs by 2022.
The company says better deals with suppliers, more shared parts and simpler designs will help it reduce material costs, while decreasing product development time will help with engineering costs.
Ford also said it planned to cut one-third of its engine development costs and redeploy them to electric and hybrid vehicles. It plans to introduce 13 new electrics and hybrids over the next five years, including a small electric SUV coming in 2020.
“Those efforts are already underway,’’ Shanks said, noting that the company spent less on engineering and materials in the third quarter.
But Ford is struggling to be heard over splashier announcements from rivals like General Motors Co, which said last week that it would soon be testing self-driving Chevrolet Bolt electric cars in New York, and Fiat Chrysler Automobiles, which is supplying hybrid minivans to Waymo, Google’s autonomous car division.
GM’s share price hit an all-time high on Tuesday, climbing above $46 per share after the company reported a $2.5 billion pre-tax profit despite selling its European division. FCA’s shares also jumped after it reported a 50% increase in its third quarter net income, to $1 billion.
But Ford’s shares have languished. They closed on Wednesday at $12.04.