Ford surprises in 2Q with record North American profit
DEARBORN, Michigan (AP) — Ford Motor Co.'s net income jumped 44 percent to $1.9 billion in the second quarter as global sales rose and customers paid more for new trucks and SUVs with premium features.
Ford pulled off a record quarterly profit of $2.6 billion in North America even though dealerships weren't fully stocked with its best-selling vehicle, the F-150 pickup. The results bode well for the second half of the year, when Ford's two U.S. truck plants will be in full production and dealers will have more pickups to sell.
"We are now more confident than ever that we will deliver a breakthrough year," Ford's CEO Mark Fields said on a conference call with analysts. Fields said Ford still expects to achieve a pretax profit of $8.5 billion to $9.5 billion this year.
Ford's shares rose 1 percent to $14.76 in midday trading.
In North America, technology-rich versions of the Ford Explorer, Ford Edge and Lincoln MKX SUVs drew buyers to showrooms even as smaller, less-profitable cars like the Focus struggled.
U.S. buyers paid an average of $37,013 for the new Edge crossover in the second quarter, or $1,683 more per vehicle than they were paying for the outgoing model last year, according to Kelley Blue Book. Among the Edge's pricey new features is a system that automatically parks the car in parallel or regular parking spaces.
Ford said F-150 buyers paid an average of $3,800 more per truck in the second quarter, loading them up with features like a 360-degree camera and adaptive cruise control.
Outside North America, new vehicles like the new S-Max wagon in Europe, the Ka small car in South America and the Mustang sports car in China commanded higher prices.
The results mirrored those at Ford's crosstown rival, General Motors, which last week reported a record second-quarter profit of $2.8 billion in North America on the strength of its SUV and truck sales.
Ford's profit of 47 cents per share compared with a profit of 40 cents per share a year ago. That beat Wall Street's expectations of a 37-cent profit for the April-June period, according to analysts polled by FactSet.
Ford's global sales rose 2 percent during the quarter to nearly 1.7 million. Sales were up in North America and Europe but fell in South America, the Middle East and Asia.
Revenue fell slightly to $37.3 billion. Chief Financial Officer Bob Shanks said revenue took a $2 billion hit from the strong U.S. dollar, which hurt profits in Europe, South America and elsewhere. Ford's revenue beat analysts' expectations of $35.5 billion.
North American margins, which hit 11.1 percent in the second quarter, are expected to end the year in the upper end of the 8.5 percent to 9.5 percent range, Shanks said. Ford's overall automotive operating margin was 7.2 percent.
The company lost money in Europe, South America and the Middle East but earned a record profit of $192 million in Asia despite a sales slowdown in China.
Ford said commercial vehicle sales have slowed in China, an indicator that buyers there aren't confident about the economy. While Ford has dialed back its forecast for industry sales in China this year, it still thinks the country is on track to sell 30 million vehicles annually by 2020. That's almost double the number sold in the U.S.
Fields also said new vehicles coming to China this fall, like the Taurus sedan and the Everest SUV, will boost sales.
"We're still very bullish on China, but it's going to go through its fluctuations. That's what happens in emerging markets," Fields said.