Followers | 175 |
Posts | 132096 |
Boards Moderated | 7 |
Alias Born | 07/02/2005 |
Tuesday, April 28, 2015 4:15:47 PM
Excluding one-time items, Ford earned $0.23 a share, $0.03 short of Wall Street's $0.26 estimate. But Ford confirmed that it remains on track toward its full-year goal: a big increase in pre-tax profits.
Ramping up now for big gains later this year
Ford reported revenue of $33.9 billion for the quarter. That was down $2 billion from a year ago, a drop that Ford attributed to a couple of factors. First, the strength of the U.S. dollar versus other currencies reduced the value of Ford's overseas earnings when expressed in dollars. CFO Bob Shanks said in an interview that about 70% of that $2 billion drop was due to foreign-currency exchange. (Ford hedges against exchange-rate moves, but its older hedges hadn't anticipated the sharp rise of the dollar, Shanks said.)
Second, Ford's total wholesale volumes were down by about 21,000 vehicles. That was largely due to the continuing ramp-up of production of the all-new F-150 and Edge SUV. Shanks said that wholesale shipments of the F-150 were down about 40% from the year-ago quarter, and Edge shipments dropped by more than half. U.S. retail sales of the Edge were down about 10,000 units in the quarter.
Had production of both models been at full speed, Shanks said, Ford's North America and overall pre-tax profit would have been higher by over a billion dollars, and the company's operating margin in North America (6.7% during the quarter) would have been "easily over 10%."
That's because new products improve Ford's ability to command higher prices. Fresh, competitive products can be sold at top prices with fewer discounts. In addition, Ford's latest products are offered with more premium options packages that can boost per-sale profits significantly.
That effect showed up in North America, where stronger pricing contributed $402 million of gains, partially offsetting new-product launch costs. It also helped in South America, where Ford's all-new small car, the Ka, helped boost pricing (and overall market share) amid difficult economic conditions that have hurt overall sales and profits across the industry.
Overall, Ford gained about $840 million in pre-tax income from improved pricing around the world, although that was offset by increased costs and other factors.
Europe and South America dragged, but Asia is ramping up, too
Not all of the news had a silver lining, though. Europe continues to be a money-loser for Ford, although its loss of $185 million for the quarter represents progress. Ford continues to say that its full-year losses in Europe will be lower than the roughly $1 billion it lost last year, and that it expects to return to profitability next year.
Shanks said he expects to see pricing gains in Europe later this year as more new products arrive at European dealers. The all-new Mondeo sedan -- the European twin of Ford's Fusion, which went into production at the end of 2014 -- is already helping.
Ford's Asia-Pacific unit, which includes its fast-growing operations in China, earned $103 million, a significant drop from the $291 million profit it posted a year ago. Most of the difference ($166 million) was due to increased structural costs: Ford is putting the finishing touches on two new factories that will open later this year. Those should help boost sales and profits in the second half of 2015.
And Ford -- along with the rest of the industry -- continued to face tough sledding in South America, though its $189 million loss was much improved from the $510 million hit it took a year ago. Ford gained market share and improved its pricing, as noted above, but it wasn't enough to offset a drop in overall sales volume.
Ford still expects a very strong 2015
Ford's outlook for the full year is mostly unchanged. It still expects its full-year pre-tax profit (excluding special items) to come in between $8.5 billion and $9.5 billion, with higher revenue, operating margin, and operating-related cash flow compared to 2014.
Specifically, Shanks emphasized that results in North America should be "very strong" in the second half, as the all-new F-150 and Edge hit their strides. Ford revised its official guidance for North America operating margins up a bit, to between 8.5% and 9.5% for the full year. But it made a small negative change to its expectations for South America, where ongoing tough conditions now look to make things a bit worse than it had expected.
Ford's second half should be very strong, but next quarter's results may be subdued. That's a reversal of Ford's usual pattern, in which costs rise (and profits drop) later in the year as the company ramps up to launch the next year's new models.
Ford had $19.5 billion in cash on hand at the end of the quarter, a $2.2 billion drop from the beginning of the year. Much of that change ($1.8 billion) was attributable to capital spending, new factories, and tooling needed to build all of those new Fords.
Ford still expects its operating cash flow for the full year to be higher than the $3.6 billion it generated in 2014.
So, why did Wall Street miss?
Why did Wall Street's experts overestimate Ford's per-share earnings?
Shanks said it appeared that some analysts failed to factor higher taxes into their financial models. Ford had hinted that its taxes would come in higher in the first quarter, but some analysts missed that, he said. (Ford's tax rate fluctuates as its sources of income change from quarter to quarter.)
Ford paid at a 34% rate during the quarter, and Shanks said Ford expects to pay at the 34% rate next quarter as well.
Recent F News
- AIG names new CFO; Progyny Drops 24% After Losing Key 2025 Contract; Exicure Jumps 190% With Nasdaq Extension • IH Market News • 09/19/2024 10:26:48 AM
- Ford Motor Company Sued for Securities Law Violations - Investors Should Contact The Gross Law Firm for More Information - F • PR Newswire (US) • 09/19/2024 09:45:00 AM
- BMW, Ford and Honda Begin Operations of Vehicle-Grid Integration Joint Venture ChargeScape; Name Joseph Vellone CEO • PR Newswire (US) • 09/18/2024 12:30:00 PM
- Stingray Debuts Karaoke on Ford Vehicles: F-150 Lightning and Mustang Mach-E • GlobeNewswire Inc. • 09/17/2024 12:00:00 PM
- The Gross Law Firm Announces the Filing of a Securities Class Action on Behalf of Ford Motor Company(F) Shareholders • PR Newswire (US) • 09/16/2024 09:45:00 AM
- The Gross Law Firm Announces the Filing of a Securities Class Action on Behalf of Ford Motor Company(F) Shareholders • PR Newswire (US) • 09/16/2024 09:45:00 AM
- Form 8-A12B/A - Registration of securities [Section 12(b)]: [Amend] • Edgar (US Regulatory) • 09/13/2024 08:34:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/13/2024 08:30:07 PM
- OpenAI Unveils Strawberry AI Model Series; Boeing Stock Falls 4% Amid Strike; HR Surges 20% on Growth Forecast • IH Market News • 09/13/2024 10:12:55 AM
- Universal Technical Institute and Ford Celebrate 25 Years of Ford's Manufacturer Specific Advanced Training (MSAT) Program • PR Newswire (US) • 09/12/2024 08:15:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/12/2024 12:02:23 PM
- Ted Cannis to Retire After 35-Year Ford Career; Andrew Frick Named Interim Ford Pro Leader; Daniel Justo Appointed Head of FCSD • Business Wire • 09/12/2024 12:00:00 PM
- Class Action Filed Against Ford Motor Company (F) Seeking Recovery for Investors - Contact The Gross Law Firm • PR Newswire (US) • 09/12/2024 09:45:00 AM
- Ford Motor Company Sued for Securities Law Violations - Contact the DJS Law Group to Discuss Your Rights - F • PR Newswire (US) • 09/11/2024 12:30:00 PM
- U.S. Futures Drop Ahead of Inflation Data; Oil Rises on Hurricane Francine • IH Market News • 09/11/2024 10:29:19 AM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Southern California Edison and Ford Team Up to Reward Electric Vehicle Customers for Supporting the Grid • Business Wire • 09/10/2024 04:04:00 PM
- Ford Motor Company Class Action: The Gross Law Firm Reminds Ford Investors of the Pending Class Action Lawsuit with a Lead Plaintiff Deadline of October 7, 2024 - F • PR Newswire (US) • 09/09/2024 09:45:00 AM
- Broadcom Down 10% Post-Earnings, UiPath Up 8%; Qualcomm Eyes Intel Assets; Salesforce Acquires Own Company • IH Market News • 09/06/2024 11:59:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:52 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:42 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:32 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/05/2024 09:11:02 PM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM