kscarbel2 Posted July 28, 2016 Share Posted July 28, 2016 Automotive News / July 28, 2016 Ford Motor Co. today said its second-quarter profit fell 9 percent to $1.97 billion and warned of a “very weak third quarter” as U.S. demand softens and the automaker launches redesigned versions of its heavy-duty pickups. Even with the decline, Ford achieved record net income and margin for a half-year period. But executives said the company was at risk of falling short of its full-year targets and was undertaking a series of “profit improvement actions,” including cuts to manufacturing costs, without being specific. “We delivered another strong quarter -- one of our best second quarters ever -- and record pretax profits for the first half of this year,” CEO Mark Fields said in a statement. “We remain committed to delivering another full year of strong profitability, even as we address some new risks and market challenges around the world.” Revenue in the second quarter increased 6 percent to $39.5 billion. Ford had $4.2 billion in positive automotive cash flow, a record for any quarter. Regional results In North America, Ford posted a pretax profit of $2.7 billion, 5.3 percent lower than the same period last year. Its margin for the region decreased to 11.3 percent from 12.2 percent a year ago. European profits nearly tripled, to $467 million, despite some hits it sustained after the United Kingdom voted to leave the European Union. It was Ford of Europe’s best quarter since 2008. It lost $8 million in Asia Pacific, breaking a streak of 12 consecutive quarters in the black there, though it was profitable in China. “We’re committed to getting to our guidance, but it is at risk,” Ford CFO Bob Shanks told reporters at Ford’s headquarters. Revised U.S. outlook Ford reduced its full-year U.S. sales outlook to between 17.4 million and 17.9 million vehicles, including medium and heavy trucks. Its previous forecast range had a midpoint of 18 million. Most of the new range is below last year’s industry total of 17.8 million units. “We’re starting to see a maturation of the economic cycle,” Shanks said. “We’re at a strong level. I think that will continue.” But, he added, “we don’t see growth in the near term.” Ford listed five actions it is taking to increase profits in the second half. They include reducing costs in manufacturing and other operations, implementing improved “go-to-market plans” in the U.S. and China to bolster revenue, and using analytics to optimize vehicle mix and pricing around the world. In the first half, Shanks said Ford beat its cost targets by $1.6 billion. He said Ford is being negatively affected by lower auction values of used vehicles, which will result in a lower profit for Ford Credit, higher U.S. incentives, a weaker-than-expected China market and the U.K. vote. Brexit In the second quarter, the U.K. vote cost Ford $60 million due to the falling value of the British pound, Shanks said. Ford expects the negative effects of the vote to total about $145 million in the second half of the year. In North America, Ford is launching redesigned Super Duty pickups this fall. The Super Duty is lighter and more powerful than the outgoing model thanks to its new aluminum body. The changeover will not be as disruptive as the F-150 switch last year, but it still will ding Ford’s revenue and profits. “This is the first full redesign in 19 years, so this is a really, really big launch,” Shanks said. “It’s a high-margin vehicle, and this is going to set the vehicle up to be a strong leader for the next decade.” Quote Link to comment Share on other sites More sharing options...
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.