Ford (NYSE:F) on Wednesday reported a stronger profit than expected for the second quarter, lifted by a lower tax rate and higher pricing on trucks and SUVs.
The quarterly report is the first since Jim Hackett was installed as Ford’s CEO after previously leading its mobility unit. Hackett took the helm amid growing concerns on Wall Street over the automaker’s strategy for investing in new technologies like self-driving cars, as well as its plans to maintain growth in its core business.
In the second quarter, Ford saw its net income climb 4% to roughly $2 billion. The company also provided a full-year earnings forecast of $1.65 to $1.85 per share, above Ford’s previous estimate of $1.58.
Despite a slowdown in U.S. sales, automakers have benefited from a shift to pickup trucks and SUVs, which generate healthier profits than small cars. General Motors (NYSE:GM), the nation’s largest automaker, reported a moderate decline in North American pre-tax earnings during the latest period. While volume was down, GM sold a record number of SUVs in the U.S.
North America also supported second-quarter earnings at Ford. Pre-tax earnings in the region hit $2.2 billion, down $500 million compared to the same period a year ago. Profit margins, a closely watched metric, fell to 9% from 11.3%.
Ford’s F-Series trucks had their best second-quarter performance since 2001, as sales rose 7%. Average transaction prices hit $45,400, up $3,100. Total U.S. sales volume was down 3%.
“On the consumer side, we remain very healthy,” Chief Financial Officer Bob Shanks said on FOX Business Network’s “Mornings with Maria.” “We think in the second half, it’s going to be about the same story. We’re going to see a very slight decline on retail and somewhat more in terms of fleet.”
Ford reported a smaller profit in Europe of $88 million, while South America’s loss narrowed to $185 million.
Overall, higher commodity costs and production cuts weighed on Ford’s operating income, which fell 16% to $2.5 billion. The results included a one-time charge related to the new factory in Mexico that Ford scrapped earlier this year.
The Dearborn, Michigan-based automaker booked adjusted earnings of 56 cents per share, beating expectations by 13 cents. Revenue fell 1% to $39.9 billion. Wall Street was looking for a larger decline to $37.1 billion.
Ford’s bottom line got help from a lower effective tax rate. In anticipation of federal tax reform, Ford booked deferred tax credits from overseas markets and halved its expected 2017 tax rate to 15%.
“We’re very hopeful there’s going to be tax reform. We’re certainly very supportive of that, and in anticipation of that, we’re taking these actions this year,” Shanks said.
Ford shares slipped 2.2% to $11.02 in recent trading. Ford has dropped 9.2% on the year.