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Ford Reports Record 3Q Profit, Fueled in Part by Strong Results in North America

Ford Reports Record 3Q Profit, Fueled in Part by Strong Results in North America
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Another good quarter for Ford (NYSE: F). The auto-maker reported a record 3Q pre-tax profit of $2.6 billion early Thursday; data it says reflects continued strong performance in North America and reduced losses in Europe.

Pre-tax profit for the quarter was $426 million higher than the same time period a year ago. Net income was $1.3 billion or 31 cents per share – down $359 million compared to the third quarter of 2012. 

That drop was reportedly due in part to the company's voluntary lump sum payout program for U.S. retirees and to Ford's operational changes in Europe – where the company lowered its losses to a better-than-expected $228 million, compared to $468 million a year ago.

"Europe losses have shrunk significantly, excluding restructuring, raising the possibility of a near-breakeven result in 2014," Morgan Stanley analyst Adam Jonas, who has an Overweight rating on Ford, said in a research note quoted by Reuters.

Bob Shanks, Ford's executive vice president and CFO, says the company also had record third quarter profit the Asia/Pacific/Africa regions, while seeing a $150 million “improvement” in South America.

Industry observers expect the company to keep its sales momentum well into next year.

“Looking ahead to 2014 and beyond Ford is well positioned to remain in a leadership position in the U.S.,” says Kelley Blue Book senior analyst Alec Gutierrrez, “despite participating in one of the most competitive markets the industry has ever seen.”

Eric Ibara, KBB's director of residual values, notes Ford's strong figures have been driven primary by their line of trucks, including the F-Series and the Explorer.

But “this is not to say that Ford’s trek out of the desert is complete,” he cautions. “Challenges remain in Europe and with the Lincoln brand. Several of Ford’s models, including the Fusion, Focus, and Escape carry rental penetrations higher than competitors’ vehicles that enjoy high residual value projections.”

Latest Ratings for F

Aug 2018NomuraMaintainsNeutralNeutral
Aug 2018CitigroupMaintainsNeutralNeutral
Aug 2018Morgan StanleyMaintainsOverweightOverweight

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