Ford Motor Company (F)

[Seminole Red]

Ford Profit Surges to Record as Sales of SUVs, F-150 Gain Speed

Earnings excluding one-times costs were 68 cents a share, Ford said in a statement Thursday. That beat the 48-cent average estimate of 16 analysts surveyed by Bloomberg. Net income doubled to $2.5 billion, or 61 cents a share, from $1.2 billion, or 29 cents, a share, a year earlier, when F-150 pickup production was limited.

“The first quarter was an absolutely terrific start to the year,” Chief Executive Officer Mark Fields said in the statement. “An all-time record for the company, with very strong performance across the business.”


Ford’s consistent profits haven’t won over investors, amid concern that the U.S. auto market peaked last year at a record 17.5 million deliveries. The automaker’s shares fell 9.1 percent last year and have continued to decline even as its SUV sales in the U.S. rose 16 percent in the quarter. Ford posted quarterly pretax earnings of $3.8 billion, a record for any quarter, aided by a record North American margin of 12.9 percent.

“When people think there’s no more growth, no matter what you do, you don’t get credit for it,” said David Whiston, an analyst at Morningstar Inc. in Chicago, who rates Ford the equivalent of a buy. “It’s unfortunate because I don’t see a recession imminent for the U.S. auto industry. They’ll be printing money in North America for quite a while. It could be several years.”

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Ford tried to address negative investor sentiment last month when Chief Financial Officer Bob Shanks told analysts the automaker could withstand a 30 percent drop in U.S. auto sales and remain profitable.

“The mantra of ‘as good as it gets’ will rule the day,” Brian Johnson, an analyst at Barclays, wrote in an April 14 note in which he lowered his price target on the Dearborn, Michigan-based automaker. “We continue to see risk-reward skewed negatively for Ford.” He rates the shares the equivalent of a hold.


è •Automotive sales rose to $35.2 billion. Analysts estimated $35.7 billion on average.


•North American pretax income rose to $3.1 billion from $1.56 billion last year. The company’s U.S. sales rose 8.4 percent and its market share climbed to 15.7 percent from 15 percent a year earlier.


•Europe pretax profit was $434 million, up from a $42 million loss last year. Ford’s European sales rose 8.5 percent to 363,500 vehicles.


•In the Asia-Pacific region, pretax profit was $220 million, up from $105 million last year. Ford’s sales in China grew 14 percent to 314,454 vehicles.


“We’re excited about our future and confident in our ability to deliver long-term growth and profitability, as we expand our business model to be both an auto and a mobility company,” Fields said in the statement.

Whiston, the Morningstar analyst, recently lowered his “fair value” price for Ford to $18 from $20.

He said persuading investors to reverse their bearish view on Ford and General Motors Co. may require an economic calamity.

“Do these companies actually have to go into a recession to prove that they are really different and much healthier than they used to be?” Whiston said. “So if you’re an investor, you’re perversely hoping there is a recession just so people will say, ‘Oh, it’s actually a much better company now, so I’ll buy it.’”


http://www.bloomberg.com/news/articles/2016-04-28/ford-profit-surges-to-record-as-sales-of-suvs-f-150-gain-speed