Ford reported net income of $1.3 billion for the second quarter this year. Much of that came from strong results in North America.
Ford Motor Co. posted net income of $1.3 billion in the second quarter due in large measure to strong results in North America. Additionally, the company turned a profit in Europe for the first time in three year and Asia Pacific sales remained strong.
However, South America continues to be a drag on the company’s results. Ford Chief Executive Officer Mark Fields said the company had a very good second quarter and the company was looking forward to a series of major launches not only in North America but also in Europe.
“To put in perspective, we are in a growth mode,” Fields said during a conference call with reporters and analysts.
“Our One Ford plan continues to deliver, enabling us to reach our 20th consecutive quarter of profitability,” Fields said. “Moving forward, our commitment is to build on this success by accelerating our pace of progress, while delivering product excellence and driving innovation in all areas of our business.”
Ford said today it will shut down its Dearborn, Michigan, plant for eight weeks to get it ready to produce the 2015 Ford F-150.
The profit came despite the fact that the company’s revenue dropped by 1% in the second quarter. North America reported a record pre-tax profit of $2.4 billion in the second quarter, an increase of $119 million from last year, despite a drop in revenue. The company said the increase came from a concerted effort to cut costs and a jump in profits from parts and accessories.
Ford still expects its earnings to shrink this year as the company continues to prepare for a launch of the new Ford F-150, which will require Ford to shutter its key truck plant in Dearborn, Michigan, for eight consecutive weeks, starting in late August. A second plant in Kansas City, Missouri, will close in January 2015 for changeover, Ford said.
The automaker affirmed its full-year pre-tax profit guidance of $7 billion to $8 billion.
Ford turned a significant profit, but faced some challenges in its markets outside of North America. With the crisis in the Ukraine continuing, the Russian market has stalled.
“The current environment is clearly difficult but Russia remains an important market,” noted Bob Schenck, Ford’s chief financial officer.
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On the plus side, Ford negotiated a new labor contract at Ford of Europe’s key plant in Cologne, Germany, which will save the company more than $60 million.
Fields said overall Ford market share, which fell by more than a point, actually expanded in nine of the 12 key markets in which the company now competes. In addition, the company also opened a new assembly plant in China and a new engine plant in Brazil.
(Click Here for details about a sales surge pushed Daimler to a Q2 profit.)
With a pre-tax profit of $2.6 billion, the company’s best quarterly earnings result since the second quarter of 2011, excluding special items, was $44 million higher than a year ago. After-tax earnings per share were 40 cents, excluding special items, which was 5 cents below year-ago results. Net income for the quarter was $1.3 billion, or 32 cents per share, an increase of $78 million, or 2 cents, from a year ago.
Net income included pre-tax special item charges of $481 million. These include the impairment of Ford’s equity investment in the Ford Sollers joint venture in Russia, reflecting the present outlook for the business, including a weaker ruble, lower industry volume and industry segmentation changes that negatively impact sales of Focus.
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Also included in special item charges are separation-related actions, primarily in Europe to support Ford’s transformation plan. All automotive business units contributed to the company’s pre-tax profit and all improved from a year ago, except South America.
North America achieved record quarterly performance for pre-tax profit, and Asia Pacific achieved a second quarter record. Europe earned its first quarterly profit since the market dramatically declined three years ago. Ford Credit delivered solid results.
The company ended the second quarter with Automotive gross cash of $25.8 billion, exceeding debt by $10.4 billion. The company completed its corporate credit facility amendment and maturity extension in the second quarter.