Ford Motor Co reported weaker-than-expected profit in the second quarter and declared that the US auto industry's long recovery was at an end, sending its stock and those of other auto companies into a tailspin. Ford shares slumped nearly 10 percent in morning trading on Thursday, after Chief Financial Officer Bob Shanks told reporters the US economic recovery is "maturing," and forecast sales would be weaker in 2017 than in 2016.
Shares of General Motors Co skidded more than 3 percent, and Fiat Chrysler Automobiles NV shares dropped more than 4 percent following Ford's results. Shanks said weakness in North America, where Ford generated 90 percent of its $2.99 billion pretax profit in the latest quarter, threatened the automaker's earlier forecast that it would equal or beat last year's pretax profit of $10.8 billion.
Ford said it will cut production in the second half of the year to reduce inventories of vehicles and accelerate cost-cutting efforts. The company now expects the US economy to grow 1.9 percent to 2.3 percent this year, lower than its previous expectation of 2.1 percent to 2.6 percent growth. The Federal Reserve last month trimmed its forecast for US economic growth to 2 percent from 2.2 percent in March
Ford's downbeat view of the US market contrasts with that of rival General Motors, which last week raised its outlook for full-year results and reported stronger margins in its North American operations. Ford's second-quarter net income fell to $1.97 billion, or $0.49 per diluted share, from $2.16 billion, or $0.54 per share a year earlier. Excluding one-time items, Ford earned $0.52 per share, against analyst expectations of $0.60 per share.
Second-quarter revenue was $39.5 billion, up 6 percent from a year earlier, beating analyst expectations of $36.3 billion. Automotive revenue was $37 billion. Ford's results showed signs of stress in various ways. In North America, revenue grew 2 percent to $23.8 billion for the quarter.