Ford CEO Jim Hackett said the company is getting itself in a better position for the future with its Q3 results.
This story has been updated with new information.
Ford enjoyed a strong third quarter, reporting a 63% rise in net income to $1.6 billion, or 39 cents per share, on revenue of $36.5 billion, largely on cost control measures and strong truck sales in North America.
The company’s operating profit for the third quarter was $2 billion or 43 cents per share, which was up 40% compared with year-ago period.
“I want to smile with the results today because we’re going to build on this going forward,” said Ford CEO Jim Hackett during a conference call.
While truck sales were strong, especially its high-profit sport-utility vehicles, Ford’s overall sales fell 2% to 1.5 million cars and trucks. The company saw sales drop in China, North America and the Middle East; they rose in Europe and South America.
(Management shake up continues at Ford. For the story, Click Here.)
U.S. sales of F-Series pickups rose 14% forthe quarter. The company said buyers paid an average of $45,400 per truck, up $2,800 from third quarter of 2016. The increase is driven by higher levels of content on these vehicles, such as infotainment systems and rear-view cameras, the company noted.
Overall, the company noted its average transaction prices increased at twice the rate of other automakers in the U.S. during the third quarter.
As a result of the positive quarterly results, Ford raised its full-year earnings estimate to $1.75 to $1.85 per share, up from $1.65 to $1.85. That compares to $1.76 per share in 2016.
(Ford readying wave of new products, hints Hackett. Click Here for the story.)
Bob Shanks, Ford CFO, described the quarter as a “good down payment” on the company’s future efforts, especially as it looks to cut costs by $14 billion by 2022. The cost controls during last quarter came from a reduction of non-repeat recalls, a reduction in material cost efficiencies and lower structural costs.
Ford’s margin for the quarter came in at 8.1% and Shanks expects that to improve slightly as the cost control efforts continue through the rest of the year. The automaker’s market share dropped slightly in the U.S. to 13.5% despite a 4% rise in sport-ute sales during the period.
Despite a small decline in sales in China, the world’s largest auto market, the company reported records in operating margin and pre-tax profit in its Asia-Pacific business. The rest of the company’s businesses around the world were basically “break-even.”
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Shanks noted that profitability in Europe was down, posting an $86 million loss, but he expected the business would rebound into the black during the fourth quarter. Ford Europe was hit by costs associated with the Brexit process, the company reported.
How is the margin calculated?
I get 2.0/36.5 = 5.5% or
1.6/36.5 = 4.4%