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Ford Q4, Full-Year 2015 Earnings Blow Away Expectations

North America helped drive results; Europe turns profit.

by on Jan.28, 2016

Ford CEO Mark Fields said the company would turn a profit in Europe and with a strong fourth quarter, it did. Expectations are higher for 2016.

Low gas prices leading to a shift to buyers gobbling up trucks, SUVs and crossovers played into the sweet spot of Ford Motor Co.’s line-up and allowed the maker to exceed expectations for the fourth quarter and for full-year 2015 results.

The Dearborn, Michigan-based automaker reported fourth-quarter earnings of $2.3 billion, or 58 cents per share, on revenue of $40.3 billion. This outpaced last year’s results of $1.2 billion at 26 cents per share on revenue of $33.8 billion.

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Analysts had expected Ford to report adjusted earnings of about 51 cents a share on $36.40 billion in revenue for the final segment of 2015, according to a consensus estimate from Thomson Reuters.

The news only improves when spread out of over the full year. Ford reported a record full year 2015 pre-tax profit, excluding special items, of $10.8 billion, up $3.5B; after-tax earnings per share of $1.93, excluding special items, up $0.59 cents from a year ago

If you go to the bottom line, the company’s full year net income was $7.4 billion which was up $6.1B compared with the year-ago results, including after-tax earnings per share of $1.84, up $1.53 from 2014.

Ford's truck sales in North America helped to drive the company's profitable 2015.

(Ford finds way to boost bottom line by $1.5 bil. Click Here to learn how.)

“We promised a breakthrough year in 2015, and we delivered,” said Mark Fields, Ford president and CEO. “In 2016, we will continue to build on our strengths and accelerate our pace of progress even further, while transforming Ford into both an auto and a mobility company and creating value for all of our stakeholders.”

The company managed to record profits from all of its automotive markets with the exception of South America, where conditions continue to be difficult. Fields predicted earlier this month that the automaker would see a profit for its long-suffering European unit.

Europe’s fourth quarter profit improved by $428 million to $131 million. The automaker said the improvement was driven by market factors and lower costs as a result of the company’s transformation plan. For the full year, Ford was Europe’s best-selling commercial vehicle brand, reflecting the strength of the renewed Transit line-up and Ranger.

“For 2016, expect pre-tax results to be higher than 2015,” officials predicted.

While Europe coming around to profitability was a sign of progress, the company’s primary profit generator last year was still North America, including growth in the top line, an operating margin of 10.2%, up 1.2%, and higher pre-tax profit.

Much of that was driven by the record 17.47 million vehicles sold overall in the U.S. last year, according to Autodata. Buyers were looking were looking for what Ford was selling: trucks.

(Click Here for details about Ford’s plans to abandon Japanese, Indonesian markets.)

Sales of Ford’s F-Series pickup trucks rose 15% in December. The F-Series, led by the F-150, extended two streaks: 39 years as the best-selling truck in the United States and 34 years as the best-selling vehicle of any kind. Sales of the F-Series were nearly 4% higher in 2015.

“Ford’s truck and SUV success in the fourth quarter helped it deliver on claims of record profit in 2015,” said Karl Brauer, senior analyst at Kelley Blue Book. “The U.S. market is hungry for the same products Ford specializes in, with sales growth for the F-150, Explorer and Edge generating strong income last year.

“The concept of developing and committing to a long-term global product plan, instituted under Alan Mullally and maintained by Mark Fields, is working for Ford. Fields is also expanding Ford’s effort to support car sharing business models and connected car technology. Despite some headwinds in China and South America the company continues to build momentum, and profit, in most global markets.”

The company’s results in Asia were promising with a record full-year pre-tax profit up 29% from a year ago, which was driven by record profit in the fourth quarter. Last year helped the automaker set new records for volume, revenue and operating margin.

Much of it was borne out the success of the all-new three-row Edge, Figo, Everest, Taurus, new Ranger and Lincoln MKX. For 2016, Ford expects pre-tax results to be higher than 2015.

(After years in the red, Ford finally expects Europe to be back in the black. Click Here for the story.)

“We delivered improvements in 2015 on every single driver of value in our business – growth, returns, risk, and rewards. We look forward to 2016 and strengthening the value proposition at Ford even further,” said Bob Shanks, executive vice president and CFO.

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