Ford profits soar on F-150 sales, Europe rebound

DETROIT -- Ford Motor Co. today posted the highest quarterly pretax profit in its 113-year history and its best-ever results in North America, driven by higher sales of the redesigned F-150 and a retooled lineup of SUVs.Ford executives said they believe the strong quarter sets the company up to equal -- or beat -- last year’s record pretax profit of $10.8 billion.Before taxes, Ford’s profit for the quarter was $3.8 billion, up from $1.7 billion a year earlier. Total company revenue increased 11 percent to $37.7 billion. Its global operating margin doubled from a year ago, to a record 9.8 percent.Ford’s first-quarter net income more than doubled to $2.5 billion. It earned $3.1 billion in North America, where it achieved a record operating margin of 12.9 percent. And its European operations earned more in the first quarter than in all of 2015.“It’s a very strong start to the year, and our expectation is to deliver another strong year in 2016,” Ford CEO Mark Fields said on a conference call.The operating profit of $2.7 billion was equal to 68 cents a share, beating analyst expectations of 48 cents. Automotive operating-related cash flow quintupled to $2.7 billion, a first-quarter record.In North America, Ford’s profit rose 96 percent, compared with a 20 percent increase in revenue and wholesales for the region.Ford earned $434 million in Europe, compared with a $42 million loss in the same period a year ago and a full-year profit of $259 million in the region.“Our objective is to make Europe a very sustainable and vibrant part of our business,” Fields said.Its Asia-Pacific profit more than doubled, to $220 million. But South American losses grew 35 percent, to $256 million.Ford’s U.S. market share rose to 15.7 percent in the first quarter, from 15 percent a year ago. Its sales were up 8.4 percent, more than double the industry’s gain of 3.3 percent.A year ago, Ford was just ramping up production of its aluminum-bodied F-150 pickup, so inventories and sales were low. Now, in addition to full stocks of the F-150, Ford is amassing inventory of Super Duty pickups to prepare for the redesigned model arriving later this year.'As good or better'Fields has said Ford’s pretax profits for all of 2016 will meet or exceed the record of $10.8 billion earned last year. Ford reaffirmed that guidance today.“Essentially everything has improved,” Ford CFO Bob Shanks told reporters at the automaker’s headquarters in Dearborn, Mich. “We’re reconfirming all of our guidance to be as good as if not better than the record year that we had in 2015.”Ford’s recent success hasn’t translated to gains in its share price, with analysts warning investors that a coming plateau in U.S. sales will mean lower results in the years ahead. But Shanks disagreed with that sentiment.“There’s nothing that we see in the leading economic indicators to suggest anything like that’s on the horizon,” he said.Ford shares rose 3.1 percent to close at $14.09.“Make no mistake, this was an impressive beat,” Brian Johnson, an analyst with Barclays Capital, wrote in a note to clients today. “Yet while strong across the board, we’re not sure that this will do much to dissuade the bears from the ‘as good as it gets’ mantra.”Shanks said Ford’s results were boosted by a strong sales mix and lower costs globally. In North America, a $1,500 per-vehicle jump in average transaction prices essentially canceled out the effect of higher incentives, but the results show a drop in net pricing to account for a significant increase in F-150 inventories, Shanks said.He said F-150 incentives were higher than a year ago but “still below our key competitors.” SUV gains

Ford profits soar on F-150 sales, Europe rebound

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