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Mayank Marwah
Mayank Marwah
Articles (691) 

What Investors Need to Know About Ford's 1st-Quarter Earnings

Automaker posts earnings beat

April 26, 2019 | About:

Ford Motor Co. (NYSE:F) released first-quarter earnings after the market closed on April 25. The Michigan-based automaker’s earnings and revenue were stronger-than-expected owing to robust demand for pickups and SUVs in North America, which offset declines in China and South America.

Snapshot of the quarter

Ford reported an adjusted profit of 44 cents per share, which beat analysts' esimates by 17 cents. Automotive revenue was $37.24 billion, topping expectations of $37.08 billion.

“This quarter was a really good start for the year,” Chief Financial Officer Bob Shanks said. “We expect first quarter EBIT to be the strongest of the year due to seasonal factors and major product launches ahead. It does, however, put us on track to deliver better company results in 2019 than last year.”

The company incurred a charge of approximately $600 million associated with shutting down its heavy-truck business in South America and remodelling its European operations,  including Russia, where it is closing two assembly plants and an engine factory.

Segment details

In North America, the company recorded operating profit of $2.2 billion. Ford attributed the strong performance to solid demand for F-Series trucks as well as Ranger pickups, which launched in January. Wholesale volume plunged to 753,000 units.

In contrast, the company registered an operating loss of $128 million in China. The company’s sales in that region dipped to $0.9 billion on the back of an aging lineup and a slowing market.

In Europe, quarterly revenue decreased to $7.6 billion. Wholesale volumes came in at roughly 391,000 units. Operating profit amounted to $57 million, reflecting a decline of $62 million from the first quarter of 2018.

Revenue in the Middle East and Africa segment amounted to $0.6 billion, while wholesale volume plunged by 3,000 units to 22,000. Earnings before interest and taxes stood at $14 million.

The Asia-Pacific region, excluding China, recorded sales declined by $0.3 billion to $1.8 billion. Wholesale volume was 76,000 units. EBIT totalled $19 million.

Restructuring efforts

The Blue Oval is investing $11 billion in its global restructuring program. The company is looking for ways to improve the performance of its existing segments, like trucks, utility vehicles and muscle cars, as well as developing new technology.

Last word

In an attempt to boost Ford’s bottom line, CEO Jim Hackett is shutting down factories, cutting thousands of jobs and ceasing sedan production in favor of high-margin SUVs and trucks.

Ford is also investing $500 million in electric vehicle maker Rivian to make a battery-powered electric vehicle. As per the New York Times:

"Ford is counting on the partnership to accelerate its efforts to field a range of electric cars and trucks, while it also pushes to streamline operations, slash costs and increase profitability."

Rivian will continue to remain an independent company.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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