Ford shares rally as truck sales fuel earnings beat

Shares of Ford Motor were poised Thursday to open sharply higher after the nation's No. 2 carmaker reported quarterly earnings and sales topping Wall Street’s expectations, as a shift to lucrative trucks and SUVs supported the manufacturer’s bottom line.

Profits still fell sharply compared to last year, reflecting challenges in China and higher prices for steel and aluminum as a result of tariff-related costs.

“We continue to make progress on our efforts to redesign Ford to be far more competitively fit, disciplined in capital allocations and nimble enough to win in a fast changing world,” Ford CEO Jim Hackett said in a statement.

Under Hackett, Ford has undertaken an effort to improve profit margins by cutting costs and shifting investments from sedans to trucks and SUVs. U.S. sales of passenger cars have suffered amid growing demand for crossovers, which are typically more profitable for automakers to sell. The company has also said it will accelerate investments in new businesses and technologies such as self-driving cars.

Investors have been waiting for Ford to reveal a full $11 billion restructuring plan. In absence of details, the stock has dropped 31 percent this year.

Shanks told reporters that Ford had no announcement coming Wednesday but will make its plans public when ready, according to the Associated Press. During a conference call with analysts, Hackett said he would provide more details as soon as possible.

On Tuesday, Ford announced a plan to make its China operations a stand-alone business and named a new CEO for the unit. The company also confirmed earlier this month that it will cut its salaried workforce.

In the third quarter, Ford earned $991 million, or 25 cents a share, on revenue of $37.6 billion. In the same quarter a year ago, the company reported a profit of $1.57 billion, or 39 cents a share.

Adjusted earnings, which exclude one-time items, came in at 29 cents a share to beat analysts’ forecast of 28 cents, according to Refinitiv. Automotive revenue also topped expectations, rising about 3 percent to $34.7 billion. Analysts were looking for $33.3 billion.

Ticker Security Last Change Change %
F FORD MOTOR CO. 15.62 -0.28 -1.79%

North America, Ford’s key market, produced $2 billion in pre-tax earnings, up about $100 million year-over-year amid a higher mix of trucks and SUVs. The Dearborn, Michigan-based company’s U.S. sales have dropped 2.4 percent overall so far this year. In the Asia Pacific region, Ford said it posted a loss of $208 million before taxes due to lower volume and net pricing in China.

Bob Shanks, Ford’s chief financial officer, said tariffs created headwinds of $1 billion during the quarter. Higher commodity costs accounted for $600 million of those costs. Other tariff-related expenses were tied to Chinese tariffs on U.S.-made vehicles and Ford’s decision to cancel plans to sell the Focus Active in the U.S. The Focus Active was set to be built in China.

With the Focus Active out of the picture, the Ford Mustang will be the lone passenger car in the Blue Oval’s U.S. lineup by 2020. Ford wants to update 75 percent of its portfolio, including the launch of the Ranger truck and Bronco SUV. Redesigned F-150 pickups are scheduled to arrive in 2020.

Ford shares rose 5.5 percent in after-hours trading Wednesday.