Ford Posts First Quarter 2014 Pre-Tax Profit of $1.4 Billion, Net Income of $989 Million;
Global New Product Launches on Track+ ...LINK
• First quarter pre-tax profit of $1.4 billion, a decrease of $765 million compared with a year ago;
after-tax earnings per share of 25 cents, excluding special items; 19 th consecutive profitable quarter
• First quarter net income of $989 million, or 24 cents per share, a decrease of $622 million compared
with a year ago, including pre-tax special item charges of $122 million
• Solid results overall; quarter adversely impacted by several significant factors not representative of
underlying business run rate
• Automotive operating-related cash flow of $1.2 billion. Ford ended first quarter with Automotive gross
cash of $25.2 billion, exceeding debt by $9.5 billion, and a strong liquidity position of $36.6 billion
• Wholesale volume and revenue both increased from a year ago, with continued market share gains
in Asia Pacific, driven by record market share in China
• Asia Pacific reported record profit for any quarter; North America and Middle East & Africa were profitable;
Europe reduced its loss by more than half and South America incurred a larger loss compared with a year ago
• Ford Credit once again delivered solid results
• Ford affirms its full-year pre-tax profit guidance of $7 billion to $8 billion as it launches 23 new global vehicles,
the most in a single year in its history; Automotive revenue to be about the same as last year; Automotive operating
margin to be lower; and Automotive operating-related cash flow to be positive but substantially lower than 2013
North America reported a pre-tax profit of $1.5 billion in the first quarter, a decline of $892 million from last year’s record profit. The results are more than explained by unfavorable market factors and higher costs. The higher costs are more than explained by $500 million related to warranty reserve increases for field service actions and weather-related costs, as previously noted.
Wholesale volume and revenue declined 2 percent and 5 percent, respectively, for the first quarter. The volume decrease is primarily explained by lower market share, partially offset by higher industry sales, including a U.S. SAAR of 16 million units that was 400,000 units higher than a year ago, and favorable changes in dealer stocks. The decline in revenue mainly reflects lower wholesale volume, unfavorable mix, lower net pricing and the adverse effect of a weaker Canadian dollar.
First quarter U.S. market share was 15.3 percent, down 0.6 of a percentage point from a year ago. The decline reflects planned reductions in daily rental sales and lower small car retail share. Total F-Series share was unchanged from a year ago.
For the full year, Ford continues to expect North America pre-tax profit to be lower than 2013 and operating margin to be in the 8 percent to 9 percent range.
South America reported a pre-tax loss of $510 million in the first quarter, a $292 million deterioration from the prior year. The decline is explained by unfavorable excha nge, including the balance sheet effects described previously; higher costs, mainly associated with economics-related effects caused by high local inflation; and lower volume, mainly due to a weaker industry.
In the first quarter, wholesale volume and revenue decreased by 8 percent and 18 percent, respectively, from a year ago. The lower volume is more than explained by lower industry volume, reflecting a 200,000-unit decline from last year’s SAAR of 5.9 million units. The decline includes the impact of import restrictions in Argentina and lower production in Venezuela resulting from limited availability of U.S. dollars. The revenue decline is explained primarily by unfavorable exchange and unfavorable volume and mix, offset partially by higher net pricing.
For the full year, Ford now expects South America to incur a larger loss than in 2013. Based on present assumptions, the company expects the rest of the year to be about breakeven to a small loss.
Europe reported a first quarter pre-tax loss of $194 million, a $231 million improvement from a year ago. The improvement reflects lower costs, favorable market factors and favorable exchange. This was partially offset by lower joint venture results and royalties in Russia and Turkey.
In the first quarter, wholesale volume and revenue improved from a year ago, up 11 percent and 18 percent, respectiv ely. The volume increase is more than explained by higher industry volumes, reflecting a SAAR of 14.5 million units for Ford’s Europe 20 markets, up over 1 million units, as well as favorable changes in dealer stocks and higher market share for Europe 20. Europe’s higher revenue mainly reflects the higher volume and favorable exchange.
Market share for Europe 20 in the first quarter was 8 percent, an increase of 0.3 of a percentage point from a year ago, reflecting improved share for Mondeo and Kuga.
Ford’s full-year guidance for Europe remains unchanged, with the region expected to improve pre-tax results compared to 2013. Ford continues to expect the region to be profitable in 2015.
Middle East & Africa reported a profit of $54 million for the first quarter, a $7 million improvement from a year ago. In the first quarter, wholesale volume and revenue declined from a year ago. The lower volume reflects lower dealer stock increases compared with a year ago. The revenue decline is more than explained by the lower volume and unfavorable exchange, primarily due to a weaker South Africa rand. Ford’s full-year guidance for Middle East & Africa remains unchanged, with the region expected to be about breakeven.
Asia Pacific reported a first quarter pre-tax profit of $291 million, an improvement of $319 million compared with a year ago, and a record for any quarter. The improvement is more than explained by favorable volume and mix and higher royalties from joint ventures. Higher costs, including investment for future growth, were a partial offset.
In the first quarter, wholesale volume was up 32 percent from a year ago, and net revenue, which excludes the company’s China joint ventures, grew 19 percent. Wholesale volume i n China increased by 45 percent from a year ago. The higher volume in the region reflects mainly improved market share, as well as higher industry volume. Ford estimates the first quarter SAAR for the region was 38.9 million units, up 1.9 million units from a year ago, explained by China. Higher revenue is more than explained by favorable mix and higher volume.
First quarter market share in the region was 3.4 percent, 0.7 of a percentage point higher than a year ago. The improvement was driven by China, where Ford’s market share improved 0.9 of a percentage point to a record 4.5 percent, reflecting continued strong sales of EcoSport, Kuga and Mondeo.
For the full year, Ford now expects Asia Pacific to earn a higher pre-tax profit than a year ago
The first quarter loss of $222 million in Other Automotive reflects net interest expense and an unfavorable fair market value adjustment on the company’s investment in Mazda. For the full year, Ford now expects net interest expense to be about $700 million, a $100 million improvement from prior guidance reflecting higher interest income.
Ford Motor Credit Company
Ford Credit’s first quarter pre-tax profit of $499 million was largely unchanged from a year ago. Ford Credit reported higher volume, reflecting increases in nearly all products globally, largely offset by unfavorable residual performance in North America. For the full year, Ford now expects Ford Credit pre-tax profit to be about equal to or higher than 2013. This reflects improved financing margin performance.
Edited by jpd80, 25 April 2014 - 06:44 AM.