Ford 3Q earnings more than double on demand for trucks
Pickup trucks powered Ford Motor Co. to record North American results in the third quarter, and the company expects the trend to continue for a while.
Ford earned $2.7 billion in North America, up 89 percent from a year ago, largely on higher sales of its new F-150 pickup truck. Ford introduced the aluminum-sided truck last fall but didn't reach full production at its two U.S. factories until June.
The results were the strongest indication yet that Ford's risky decision to remake its best-selling vehicle as a lighter aluminum model is paying off. Sales of F-Series pickups -- the F-150 and its larger siblings -- reached a nine-year high for the July-September period. In the U.S. alone, Ford sold 207,271 F-Series trucks. That's 85 trucks per hour.
Customers also paid more for them. Chief Financial Officer Bob Shanks said Ford was making an average of $2,000 more per F-Series truck compared to a year ago. Shanks said the aluminum-sided F-150, which is 700 pounds lighter than the older steel version, is a money-maker even though aluminum is more expensive than steel.
Ford's results echoed those at its crosstown rival, General Motors Co. Last week, GM posted a record $3.3 billion pretax profit in North America, driven largely by truck and SUV sales.
Truck sales should continue to be strong into next year and beyond, thanks to low interest rates, improving employment numbers and other factors, Ford CEO Mark Fields said. Ford will introduce new aluminum-sided Super Duty trucks next year, which will drive sales. And many buyers are expected to replace aging trucks soon. Fields said 25 percent of the trucks on U.S. roads are now 20 years old or older.
Ford's overall net income rose 129 percent to $1.9 billion for the quarter. Its profit, of 48 cents per share, compared with a profit of 27 cents in the same quarter a year ago.
The Dearborn-based automaker's shares fell after it failed to meet Wall Street's expectations. Excluding one-time items, Ford earned 45 cents per share, a penny lower than Wall Street's forecast, according to analysts surveyed by FactSet.
Shanks said analysts forecast a 32-percent tax rate, but Ford's third-quarter rate was 33 percent. Ford also recorded a one-time profit of $166 million with the public offering of Nemak SAB, a Mexican supplier of aluminum auto parts that Ford owns a stake in.
Automotive revenue rose 9 percent to $35.8 billion, beating analysts' forecast of $35.5 billion.
Ford's shares fell 58 cents, or 3.7 percent, to $15.10 in midday trading Tuesday.
The Dearborn-based automaker's overall sales rose 7 percent to 1.6 million. Sales were up 17 percent in Europe, but fell in South America, the Middle East and Asia. In North America, sales jumped 16 percent.
Ford lost money in Europe, South America and the Middle East but eked out a $20 million profit in Asia despite a $130 million hit from production cuts in China. Shanks said Ford remains bullish on China despite falling demand for new cars.
"We still see growth. It may be a bit slower than it has been," he said.
Shanks said Ford is on track to deliver the "breakthrough" year it promised after disappointing results last year. He said Ford's operating profit of $7 billion in the first nine months of this year is already 10 percent higher than all of 2014. He also said North American operating margins should come in at the upper end of Ford's forecast of 8.5 percent to 9.5 percent.
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