Ford's Second Quarter Surge May Be as Good as 2014 Gets
Ford Motor Co. (F), the second-largest U.S. automaker, posted profit that topped analysts' estimates as sales in China increased and the company reported its first profit in Europe in three years.
Ford reported its 21st consecutive profitable period, with net income of $1.3 billion, or 32 cents a share, compared with $1.23 billion, or 30 cents, a year earlier. Excluding one-time costs, second-quarter profit was 40 cents a share, beating the 36-cent average estimate of analysts surveyed by Bloomberg. North American operations also reported record pretax results.
Rising sales in China and Europe helped to offset the negative effects of a currency crisis in Venezuela, as well as higher taxes and increased costs to introduce 23 new models worldwide this year. Ford sales in China soared 35 percent in the year's first half to a record 549,256 vehicles, while deliveries rose 6.6 percent in Europe, which is recovering from a deep recession. Ford has said profits will decline this year as it spends to roll out new models such as the aluminum-bodied F-150 pickup, its top seller.
'This was a strong quarter,' Chief Financial Officer Bob Shanks told reporters this morning at the automaker's Dearborn, Michigan, headquarters.
Ford rose 0.7 percent to $17.90 at 7:04 a.m., before regular trading. The shares gained 15 percent this year through yesterday.
Chief Executive Officer Mark Fields, 53, who took over July 1 when Alan Mulally, 68, retired, has said he'll continue his predecessor's policies, such as globalizing products and focusing on fuel-efficiency. Ford earned $42.3 billion in the last five years after losing $30.1 billion from 2006 to 2008.
Fields Moves
Fields made his first executive appointments July 22, replacing Jim Farley as head of the Lincoln line with Kumar Galhotra, formerly Ford's vice president of engineering. Farley, who came from Toyota Motor Corp. in 2007, remains Ford's global marketing chief. Fields also hired Ken Washington, who ran Lockheed Martin Corp.'s Space Technology Advanced Research & Development Labs, to head Ford's research and advanced engineering.
'Mulally created a new attitude that was bought into by the succeeding generation of management,' said Bernie McGinn, CEO of McGinn Investment Management in Alexandria, Virginia, which holds about 400,000 Ford shares.
'Part of that is you never stop innovating. So if you need brains, you go get yourself a rocket scientist.'
Europe Profit
In Europe, where Ford said it would return to profitability next year, it reported a $14 million pretax profit in the second quarter from a loss of $348 million last year. The automaker's sales in Europe are up 6.6 percent this year as industrywide deliveries rose for the 10th consecutive month in June.
Ford had record pretax operating income of $2.44 billion in North America in the second quarter, up from $2.3 billion last year. Ford benefited from a good mix of profitable trucks and costs were held in check.
In Ford's Asia-Pacific region, pretax earnings were a record $159 million. Ford sales in China surged 35 percent in the first half of the year, as it sold a record 549,256 vehicles on strong demand for its Kuga and EcoSport sport-utility vehicles and Focus and Mondeo sedans. Last year, Ford's sales in China surpassed Toyota.
'This is a transition year for Ford, a year of investing for much better things in 2015 and 2016,' said David Whiston, an analyst at Morningstar Inc. in Chicago, who rates Ford the equivalent of buy. 'In China, Ford is just going gangbusters.'
To contact the reporter on this story: Keith Naughton in Dearborn, Michigan, at knaughton3@bloomberg.net
To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net Niamh Ring
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