Ford CEO Mark Fields described the company's outlook for the industry for this year as "realistic."
Ford Motor Co., whose executives predicted that the auto industry was facing challenges, saw its net income drop by 47% to $1.08 billion during the third quarter.
The third quarter is generally regarded as the toughest for automakers because they have to absorb the high cost of models change over. However, rival automakers, such as General Motors, Fiat Chrysler Automobiles N.V. and Daimler AG, have already reported their earnings increased during the third quarter.
“This quarter we delivered key elements of our growth plan by fortifying our core business, with the launch of the all-new Super Duty pickup, transforming Lincoln with the new Continental and investing in emerging opportunities with the acquisition of the Chariot crowd sourced shuttle service. Importantly, we remain on track to deliver one of our best profit years ever,” noted Mark Fields, Ford’s chief executive officer.
Fields also stressed that Ford’s view of the current market isn’t all that negative.
“I would call our approach realistic. We’re not optimistic and we’re not pessimistic,” Fields said during a conference call with analysts. “We’re still a strong industry We don’t see a recession on the horizon but we do see a market that’s mature.”
Consequently, the pricing environment is bound to become more competitive, which is one of the reasons why Ford is cutting back on some production. It recently announced temporary shutdowns at plants in Flat Rock, Michigan, Louisville, Kentucky, and Kansas City, Missouri, and more temporary shutdowns are likely in the fourth quarter.
Ford's 2017 Super Duty took a super-sized bite out of the company's bottom line in the third quarter.
Fields also stressed that Ford wants to “optimize” market share, but also minimize incentive spending.
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The third quarter results are certain to put further downward pressure on the value of Ford Motor Co. stock, which has dropped roughly 13 % during the past 12 months as the company’s margin have shrunk to 3.3%.
Pre-tax profit in North America of $1.3 billion, which produced an operating margin 5.8% from a year ago. The lower pre-tax profit in North America was driven by the launch impact of all new Super Duty, the dealer stock reduction for F-150 versus the increase from a year ago, normalization of series mix on F-150 and the previously announced door latch recall
Overall, Ford’s total company adjusted pre-tax profit was $1.4 billion, down from $1.7 billion during the same period a year ago, and earnings dropped 31 cents per share to 24 cents per share during the third quarter, which ended Sept. 30.
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On a positive note, Ford of Europe posted a profit of $138 million, which represented the company best third quarter in Europe since 2007. The profit in Europe, however, was offset by the losses in South America where the company lost $132 million.
Fields also noted that Ford’s decision to stay in the Russian market after competitors, notably General Motors, had pulled out is showing signs of paying off as the economy in Russia begins to stabilize.
Ford Credit also delivered its best quarterly profit was since 2011, according to Ford’s financial statement and Ford also was able to reduce material costs by more than $300 million during the third quarter, said Bob Shanks, Ford chief financial officer.
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Ford continues to expect total company adjusted pre-tax profit to be about $10.2 billion, which will make it one of the most profitable years ever for the company, Fields noted. The maker’s global market share of 7.5% is down one tenth of a percentage point from a year ago.