Driving hard - strong demand for the big F-Series line helped Ford set North American earnings records for the second quarter and first half of 2013.
Ford Motor Co. delivered a second-quarter profit of $1.2 billion, a jump of $193 million over year-earlier numbers, or 18.5%. On a per-share basis, Ford earned 30 cents, a 4 cent increase compared to the April – June 2012 period.
The maker was firing on all cylinders during the second quarter, reporting improvements in all of its individual regions, and delivering record earnings in both North America and the Asia Pacific Africa region. But Ford’s big F-Series pickups carried much of the load, the trucks a major factor in the $2.3 billion pre-tax profit in the home market.
“Our strong second quarter with improved results in every region around the world is another proof point that our One Ford plan is continuing to deliver and is building momentum,” Alan Mulally, Ford president and CEO said in a statement accompanying the earnings release.
The executive, who relinquished day-to-day management duties to new Chief Operating Officer Mark Fields late last year, is now focusing on long-term strategy, and said Ford will “remain absolutely committed” to its ongoing policies which are expected to continue “providing profitable growth.”
Ford CEO Alan Mulally expects more "profitable growth."
The strong second-quarter results buoyed Ford’s expectations going forward, the maker now saying it should beat the $8 billion pre-tax profit reported for 2012. It had previously expected to simply match last year’s numbers.
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A variety of factors played into Ford’s latest earnings gain, particularly the North American market’s strong performance. The U.S. market, in particular, has been on a roll, analysts now anticipating sales could reach 15.5 million for all of 2013, compared to 14.5 million for the industry overall last year.
Ford, in particular, has been gaining ground at home and in a variety of different market segments. It announced this week that sales of its high-mileage hybrids reached record levels in recent months, notably stealing market share from the long-time leader Toyota whose dominant Prius saw an unexpected 5% sales slide during the first half of 2013.
But the real driving factor was the resurgence in demand for Ford’s best-selling F-Series pickup line which has benefited from the revival in the housing market, a traditionally leading factor in truck sales. Pickup sales, in general, were up 22% for the first half, or roughly three times the overall U.S. automotive market’s upturn.
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Meanwhile, Ford also showed new strength in Asia, the world’s fastest-growing region when it comes to automotive demand. The maker earned a record $177 million, but what was perhaps more significant was the 47% jump in Ford sales in China, now the world’s largest auto market, about three times the industry’s growth rate.
Ford had been slow to grasp that growth and has been racing to catch up with key rivals General Motors and Volkswagen AG there. Mulally has made a series of trips to China and only last month was there to discuss plans for a big increase in Ford’s engine and assembly plant capacity. Nonetheless, the maker still has a long way to go to come close to the market share it enjoys in other key global markets.
And there are concerns that China’s economy could be slowing down, which would raise concerns about Ford’s aggressive growth plans there. But the maker has other, more serious challenges.
On the positive side, narrowed its losses in Europe to $348 million for the second quarter compared to $404 million a year ago. But with no clear path out of the Continent’s ongoing economic problems it remains uncertain whether the auto market there has finally bottomed out after hitting a two-decade low. Ford is in the midst of closing several unneeded plants, a move that European chief executive Steve Odell promised is putting his company back on the ascent.
“It’s beginning to show signs of stability,” Odell observed earlier this month, adding that the maker expects to be profitable again in Europe by 2015. For all of this year, it still expects a $1.8 billion loss, but that was cut from an earlier forecast of $2 billion in red ink.
Ford’s net earnings without the adjustment for one-time items — including the cost of plant closings in Europe – came to 45 cents a share, exceeding the 37-cent consensus analyst forecast, according to FactSet.
The maker generated $38.1 billion in revenue for the second quarter, a 14% jump, which also beat the consensus forecast of $34.9 billion.
Ford’s automotive operating margins jumped by 1.5 points to 6.4%, it reported. Meanwhile, operating-related cash flow increased to $3.3 billion, up $2.5 billion from a year ago.
Ford’s first-half pre-tax profits totaled $4.7 billion, while net income came in at $2.8 billion. Those figures were up $579 million and $408 million, respectively.
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