Ford 1Q profit down on recalls, lower sales, but tops Street
Ford Motor Co.'s net income fell 35 percent to $1.6 billion in the first quarter as it was hit by costly recalls, lower sales and rising prices for steel and ot...
DEARBORN, Mich. (AP) — Ford Motor Co.’s net income fell 35 percent to $1.6 billion in the first quarter as it was hit by costly recalls, lower sales and rising prices for steel and other materials.
The Dearborn-based automaker had warned investors and analysts to expect weaker results in the first quarter. Ford earned a record pretax profit in the first quarter of 2016.
Ford Chief Financial Officer Bob Shanks said the company remains on track for a pretax profit of $9 billion for the full year. That’s down from $10.4 billion in 2016.
Without one-time items, including a gain from the closure of a planned plant in Mexico, Ford earned 39 cents per share, beating forecasts. Wall Street expected earnings of 35 cents per share, according to analysts polled by FactSet.
Ford announced two North American product recalls in March that cost the company $295 million. The company recalled more than 230,000 vehicles because of the risk of engine fires and 210,000 vehicles for defective door latches. Those actions were in addition to a recall last fall of 2.4 million vehicles to fix door latches which cost Ford $600 million.
Ford’s sales dropped slightly in the first quarter to 1.7 million vehicles. Ford’s North American market share dropped as it sold fewer vehicles to rental fleets, but it said U.S. sales to individual buyers were up. Sales also fell in China. Shanks said Chinese customers rushed to buy vehicles at the end of 2016 before a tax incentive expired, so the market suffered in the first quarter.
North America powered Ford’s profits. The company earned a pretax profit of $2 billion in the region, down 45 percent from a year ago. Revenue rose slightly as the company sold a higher mix of high-profit trucks and SUVs. Ford said the average price customers paid for a vehicle was up $1,971 in the U.S. in the first quarter, compared to an industry average increase of $506.
Ford eked out smaller profits in Europe and Asia but lost money in South America, the Middle East and Africa.
Ford’s revenue climbed 4 percent to $39 billion in the first quarter. Its automotive revenue was $35.2 billion, beating analysts’ forecast of $34.2 billion.
Ford shares gained 2.1 percent to $11.84 in premarket trading.
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