Ford Motor Co. (F, Financial) expects 2016 to be a strong year and plans to reward investors through dividends.
The Detroit automaker started the year on a positive note with outstanding first-quarter results. Ford said it doubled its profits in the first quarter, making it the company’s best first-quarter result in its 113-year existence.
Lowering of costs in the U.S., extended production capacity in China plus improved profits in Europe supported the Blue Oval’s overall quarterly performance with a solid boost to the bottom line.
Here’s a closer look at some of the essential quarterly numbers.
By the numbers
Ford’s revenue for the first quarter came in at $37.7 billion, beating analyst estimates of $36.1 billion. The automaker registered a record net income of $2.5 billion, up from $1.2 billion a year earlier. Earnings per share for the company (excluding one-time items) came in at 68 cents, comfortably surpassing Wall Street’s estimate of 29 cents per share.
Ford’s first-quarter profits surged mainly on the back of huge demand for SUVs and F-150s. The Blue Oval also maximized market share in North America. The company earned $3.1 billion in pretax earnings in North America along with a scintillating operating margin of 12.9%. However, Ford expects its North America margin to reduce to 9.5% by the end of the year on account of rising costs in the latter half as the carmaker plans to introduce the redesigned super-duty pickups. The company will suffer a production hit during summers when it will have its factory units shut down for retooling.
Ford got the better of crosstown rival General Motors (GM, Financial) both in terms of revenue and profits in the January-March period. The company’s wholesale volume climbed to 1.72 million units, which represents an increase of 152,000 units during the quarter compared with last year. Sales of SUVs and F-150s have also risen due to low gas prices.
Performance in various markets
Ford seems to be at its peak with new product launches leading to global expansion. Though things seem bright for the company, weakness in South America along with recurrent product recalls and rising structural costs are some areas of concerns.
As far as the long ailing European market is concerned, Ford is finally seeing a turnaround that is reflected in the numbers. The American car manufacturer lost billions in the region between 2011 and 2014. However, things are gradually turning in favor of the company after it worked on expanding its regional product portfolio and restructuring operations. The company is now in a commanding position with improved market share and a pretax income of $434 million and operating margin of 6.3%.
In the Asia Pacific region, Ford recorded an impressive pretax income of $220 million, more than double the $105 million registered in the previous year, and an operating profit margin of 8.2%.
The second-largest Detroit automaker is picking up its pace in China, where it lags behind General Motors and Volkswagen (VLKAY, Financial) with much stronger footprints. Ford generated earnings of more than $400 million last quarter in the emerging market. The growth in China along with profits in Europe has more than compensated for the softness in South America, Russia and other markets.
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