Ford Motor Co reported sharply higher quarterly profit on October 27, driven by its record quarterly performance in North America. Ford executives also cautioned that year-end sales promotions could cut into North American profit margins during the current quarter. Ford has told dealers in the United States that it plans next week to launch a new drive to boost sales during the last two months of the year.
The new "Friends and Neighbours" program would offer vehicles to all buyers at the so-called X plan price, which is usually a small mark-up above the dealers' invoice price, according to people familiar with the program. X plan prices are usually limited to people with business or personal connections to Ford or its employees.
A Ford spokesman declined to comment. Net income rose to $1.9 billion in the third quarter from $1.1 billion a year ago. After taxes, earnings excluding one-time items were 45 cents a share, one penny short of the consensus analyst estimate. The company said the shortfall was due to taxes that came in higher than analysts expected.
Ford and its Detroit-based rival, General Motors Co, both earn the bulk of their profits selling trucks and sport utility vehicles in the United States. The average transaction price for an F-series truck rose about $2,000 to $42,000 in the latest quarter, Ford Chief Financial Officer Bob Shanks said.
Of Ford's $35.8 billion in automotive revenue, 66 percent was derived from North America in the quarter.
Ford and the United Auto Workers will soon begin contract negotiations in which the union is expected to push for a greater share of profits. Once-promising emerging markets such as Brazil have turned into money losers for Ford and GM. But Shanks said the company remained optimistic about China, and forecast a record fourth quarter in its Asia-Pacific operations.
The No 2 US automaker reaffirmed its forecast for pre-tax profit of $8.5 billion to $9.5 billion for the full year, and said profit margins in North America would be at the upper end of a previous forecast of 8.5 percent to 9.5 percent.
Through the first nine months of the year, Ford's North American profit margin was 9.9 percent. GM posted a 10.5 percent margin in the same period. For the latest quarter, Ford reported pre-tax profit of $2.7 billion in North America, lifting profit margins to 11.3 percent in large part because of strong sales of its F-series large pickup truck line.
The pre-tax profit for the full company was the same, $2.7 billion. Outside of North America, Ford lost $340 million before taxes, although the company said losses in Europe and South America were narrowing.
Quarterly revenue was $38.1 billion, up $3.2 billion from a year ago despite the impact of a stronger dollar. Shanks said vehicle sales in China would be unchanged for the year at 24 million, better than most analysts had expected a few months ago.
Comments
Comments are closed.