The Michigan-based automaker Ford (F, Financial) just came out with its third quarter financial results on Oct. 24. Not only did sales decline in China, but it struggled in its core and most lucrative market, the U.S. However, the company’s performance in the North American market was stellar and unexpectedly robust, which somewhat made up for the losses that the company faced oversees.
Key metrics
The company posted quarterly earnings of 29 cents a share that reflected a plummet of 33% from the same period last year. Revenue was $34.66 billion, and the company had a balance of $18.6 billion in cash and cash equivalents at quarter-end.
SUVs and trucks keep Ford in hunt
Robust truck sales in North America helped the company to compensate for lower passenger car sales, mounting costs, declining volume and problems in China. In fact, the Blue Oval said its F-Series line of full-sized pickup truck managed to gain supremacy in North America as Super Duty trucks were sold at a high transaction value.
Matt DeLorenzo, Kelley Blue Book senior managing editor, commented: "The shift to trucks is really the driver to profitability and the margins ... Ford is pretty well positioned right now with their current product mix. The car decision right now won't hurt them much in the short term. We'll have to see where the market goes in the longer term."
Segment details
In North America, the company’s sales surged to $22.3 billion. The sales gain was attributable to high volume of sales of trucks and SUVs. Wholesale volumes plunged 6,000 units to 644,000 units. The segment’s Ebit came in at $2 billion, up from $1.9 billion reported in the year-ago quarter. U.S. sales dropped 3.7% during the quarter.
In Europe, the company lost a mammoth $152 million, compared to a loss of $53 million in the third quarter of last year. The segment’s revenue, though, climbed $500 million year-over -year.
In South America, Ford’s revenue plummeted to $1.3 billion. The company also registered a pretax loss of $152 million on account of high commodity costs and unfavorable exchange rate. Wholesale volumes amounted to 94,000 units, down 6,000 units.
In the Middle East and Africa segment, the company posted a revenue decline of $41 million to $600 million as a result of lower sales volume. In contrast, the company managed to trim costs during the quarter and maintained strong pricing.
In the Asia-Pacific region, the revenue fell by $600 million to $3.1 billion. The company lost a mammoth $208 million in the segment. Much of the decline came from China where sales dipped 37% year-over-year. The China segment is currently undergoing a major restructuring program, which would take few quarters to show proper results.
Outlook
The company projects full-year adjusted earnings per share to fall between $1.30 and $1.50. The company also expects its Europe and China business to worsen, which diminishes its chances of achieving Ebit margin of 8% by 2020.
Disclosure: I do not hold any position in the stock mentioned.
Read more here:Ă‚
Ford’s China Sales Fall in September
