Ford (F) failed to meet Wall Street’s expectations on Friday, reporting first-quarter earnings that suffered from higher warranty costs and losses due to currency devaluations in South America.

The No. 2 U.S. auto maker said earnings fell 39% to $989 million, or 24 cents a share as company put aside $500 million to warranty reserves for vehicles already on the road, absorbed an additional $400 million in losses due to currency devaluations mostly in Venezuela and covered higher shipping costs.

Wall Street analysts had forecast earnings of 31 cents a share. During the year-ago period Ford earned 40 cents a share on net income of $1.61 billion.

The harsh winter weather across much of the U.S. also raised costs and cut into sales, Ford said in its statement.

Ford’s shares were down 3.31% at $15.78 in morning trading amid a broader sell off in stocks.

“We had a solid quarter, and we are on track with our most aggressive product launch schedule in our history,” said CEO Alan Mulally in a statement. “Our One Ford plan continues to deliver as we serve customers in more markets around the world with a full family of vehicles committed to best-in-class quality, fuel efficiency, safety, smart design and value.”

It was widely reported earlier this week that Mulally will be leaving Ford a bit earlier than expected, before the end of the year rather than staying through 2014 as he had previously announced. According to the reports, he is being replaced by current COO Mark Fields and the transition is widely expected to be a smooth one.

Ford has declined to comment on the speculation over when Mulally will be leaving.

The company held to its forecast for a pre-tax profit of between $7 billion and $8 billion for 2014. Ford said it remains on track to launch 23 new models this year, including 16 in the U.S.

The company is also launching a redesign of one of its most popular vehicles, the F-150 pickup truck.

Wholesale volume and revenue declined 2% and 5%, respectively, for the first quarter, the company said, citing lower market share which was partially offset by higher industry sales.

Ford’s South America division lost $510 million before taxes, versus a $218 million loss a year ago. Much of that -- $310 million -- was due to a decline in the Venezuelan currency.

Ford had first-quarter pretax operating income in North America of $1.5 billion, down from $2.4 billion last year.

Overseas business strengthened somewhat as demand continued to rise in China, the world's largest auto market. Meanwhile, Ford’s European losses were smaller and less than analysts had predicted.

“The underlying run rate of our business in the first quarter was strong,” said Bob Shanks, executive vice president and chief financial officer. “We are particularly encouraged by Asia Pacific’s record profit, driven by very positive customer response to our new products, underscoring the traction and success of our growth plans in what is now the largest market in the world. In addition, the improvement in Europe confirms the progress we continue to make toward achieving a profit in 2015.”

First-quarter U.S. market share was 15.3%, down 0.6% from a year ago.

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