Ford 1Q earnings miss Street estimates, revenue matches

Earnings HQ: FBN's Ashley Webster breaks down Ford's first-quarter earnings report.

Ford Profit Dragged Down by Overseas Markets

By Earnings FOXBusiness

Ford Motor Co. (F) reported a first-quarter profit that fell 7%, missing Wall Street forecasts, as international markets continued to dampen the automaker’s earnings.

Continue Reading Below

Ford said Tuesday its net income slipped to $924 million from $989 million in the same period a year ago. On a per-share basis, earnings dropped a penny to 23 cents.

Ford’s pretax operating profit came in at $1.4 billion, or 23 cents a share. Analysts were looking for higher earnings of 26 cents a share.

Sales were down 6% at $33.9 billion, which matched Wall Street’s view.

Shares fell six cents to $15.84 in recent trading. The stock is up roughly 2.3% since the start of 2015, just behind the broader S&P 500.

Like other multinationals, Ford is seeing a negative impact from a stronger dollar that hurts profits overseas. Last week, General Motors (GM) said weakening international currencies cut into the automaker’s revenue and profit margins.

Continue Reading Below

The strong dollar and weak economic conditions in Europe and South America continued to put pressure on Ford’s operations in those regions during the latest quarter. Ford also said its tax rate was higher than Wall Street analysts anticipated.

Europe remained an uphill battle, due in part to ongoing struggles in Russia. Ford reported a European loss of $185 million, up from a $194 million loss a year earlier. Europe has been a problematic area for the auto industry, although sales in Western Europe are beginning to gain steam.

Ford’s loss in South America was $189 million, better than a year-ago loss of $510 million. But the automaker lowered its expectations moving forward. Results in South America should improve, rather than “substantially improve,” Ford said.

During a conference call with analysts, Chief Executive Mark Fields suggested progress in South America will depend on stabilization in the market. Ford posted losses of $1.2 billion in the region last year.

“We do expect [South America] to be a positive contributor to our profits in the future,” Fields said.

In North America, Ford’s pretax earnings fell 11% to $1.34 billion. Operating margins narrowed to 6.7% from 7.3%.

North American results were still a step ahead of Wall Street. Morgan Stanley analysts said Ford beat consensus estimates “where it matters most.” Excluding F-150 changeover costs, gross margins exceeded 10% amid higher pricing.

“A reiterated full-year outlook helps position [Ford] as a stable dividend bet for the rest of 2015,” the Morgan Stanley analysts wrote in a research note.

Ford, which is investing more in China, saw pretax earnings in Asia Pacific decline to $103 million from $291 million. Ford recently launched its Lincoln luxury brand in China and plans to buy a factory there for about $1 billion.

Despite the early struggles, Ford stuck with its guidance for 2015 pretax earnings of $8.5 billion to $9.5 billion. The company also raised its outlook for North American margins. Ford now expects a profit margin of 8.5% to 9.5%, up from prior guidance of 8% to 9%.

Ford said last year’s launch of a new F-150 pickup truck, the most profitable vehicle in Ford’s lineup, will help drive results in the second half. The F-150 is still making its way to dealers in larger numbers as Ford ramps up production.

Redesigned sport-utility vehicles are also on the horizon. Ford plans to sell a new Edge and refreshed Explorer later in 2015.