Ford Motor Co. beat expectations with help from a lower tax rate and increased U.S. sales of more-profitable pickup trucks, but forecast a slightly lower 2017 pre-tax profit.
Automaker reported second-quarter net income of $2.04 billion, or 51 cents per share, up from just under $2 billion, or 49 cents per share, a year earlier. Excluding one-time items, the No. 2 U.S. automaker reported earnings per share of 56 cents.
“This quarter shows the underlying health of our company with strong products like F-Series and commercial vehicles around the world, but we have opportunity to deliver even more,” Jim Hackett, Ford’s new chief executive officer said in a statement.
“The entire team is focused on improving the fitness of the business and smartly deploying our capital to improve both the top and bottom lines in the quarters ahead.”
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The quarterly financial report showed that Ford’s pre-tax profit remained under pressure in North America but it turned a pre-tax profit in both Europe and Asia Pacific, reversing losses suffered in the same period a year ago. Ford’s losses in South America continued despite what it described as improving economic conditions.
Continue to expect Europe to remain profitable, although below 2016 levels, mainly due to the effects of Brexit and higher commodity costs. Favorable market factors and continued improvement in Russia will also be a positive development.
Ford’s position in China also improved with the help of stronger sales and improved model mix helped by the growing sales of the Lincoln.
With a downturn underway in the U.S. Ford also warned that its full-year automotive operating margin and cash flow would be lower than in 2016 but reduced tax rate would boost its full-year net profit.
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Ford’s results come as the U.S. auto industry is facing eroding sales in the U.S. where manufacturers have increased the use of incentives to sell their vehicles and high supplies of unsold vehicles.
Ford said it now expect full-year adjusted earnings per share in a range from $1.65 to $1.85, above the $1.51 expected by Wall Street.
But Chief Financial Officer Bob Shanks said this would be largely due to a tax rate of 15% for the year as Ford pulls forward deferred tax losses from outside the United States and that the exact number could be affected by how the market performs in the second half of the year. Wall Street had expected an effective tax rate of 30% for 2017.
Shanks said the company’s pre-tax profit would be slightly lower than the $9 billion Ford has previously forecast. Last year Ford reported a record pre-tax profit of $10.4 billion.
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Ford’s CFO said the company has canceled plans to build the next generation of its compact Focus model in South America. For the North American market, Ford announced last month that it would move production of the Focus to China from Mexico.