Ford's Profit Falls on Recall Costs
Ford Motor's net income fell 56% in the third quarter as hefty safety-recall expenses and softer sales in the auto maker's core U.S. market dinged profits in North America, offsetting improving results in China and Europe.
Ford on Thursday reported net income of nearly $1 billion for the period ended Sept. 30, down from $2.2 billion recorded in the same year-ago period when the company, benefiting from the rollout a redesigned F-150 pickup truck, delivered a record third-quarter result.
The Dearborn, Mich., auto maker said operating profit equaled 26 cents a share, solidly beating analysts' expectations of 20 cents a share as recall expenses and marketing costs were lower than anticipated. The results were hit by a $600 million expense booked during the quarter related to an expanded door-latch recall.
Revenue declined 6% to $35.9 billion, with global deliveries down slightly, including lower sales in the U.S. The company said it had $2 billion in cash outflows in the third quarter, and plans to post positive cash flow in the fourth quarter.
Ford reaffirmed full-year 2016 guidance of $10.2 billion adjusted pretax profit. The auto maker plans to further trim production in the fourth quarter to deal with softer U.S. volumes.
Margins slipped significantly in the company's core North American operation due to the recall, launch costs and other factors.
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