Ford Beats 1Q Estimates for Earnings and Revenue, Repeats Caution on Costs

The company's earnings were slightly better than analysts had expected, though share prices fell slightly.

In 2016, the profit for the automaker was $2.4 billion, the highest profit for a quarter by the company on record. The company led by Elon Musk has posted only two quarterly profits in its history, yet its market value surpassed Ford's this month.

Operating profits were also dinged by a $295 million recall expense disclosed in March covering almost a half-million vehicles with fire risks and faulty door latches.

Operating cash flow improves marginally Ford Motor Company has generated cash of $4,336 million from operating activities during the quarter, up 4.51 percent or $187 million, when compared with the previous year period.

"One reason is the higher parts cost due to new launches, another part is investments in tech firms, and finally, there's a almost $300 million cost of a big recall", WWJ Auto Reporter Jeff Gilbert said. North America drove Ford's automotive results, although Europe and the Asia Pacific region also posted profits. Ford's North American sales and market share dropped as it sold fewer vehicles to rental fleets, but it said US sales to individual buyers were up.

The automaker, based in Dearborn, Michigan, also was faced with a hard comparison for the first quarter of previous year and has come face to face with dropping sales in the industry in the U.S. Revenue for the quarter rose to $39.1 billion from $37.7 billion a year earlier.

Image showing materials and warranty costs as biggest pull down on earnings
Image source Ford's Q1 earnings presentation April 27 2017

The company said it still expects 2017 North America results "to be strong, but lower than 2016". Sales in China decreased after the government reduced a tax break for small-engine cars.

In a March regulatory filing with the U.S. Securities and Exchange Commission, Ford projected its first-quarter earnings per share to come in between 30 cents and 35 cents. US retail share was up, reflecting higher share in trucks, utilities and Lincoln.

The automaker's revenue rose 1.4 billion, or 4 percent, to $39.1 billion thanks to a strong sales mix.

First-quarter adjusted earnings fell by 42 percent, dragged down by wagers on battery-powered and autonomous autos.

Ford shares fell 13 cents, or 1.1 percent, to close Thursday at $11.47. "Plus (first quarter 2016) was a phenomenal quarter across the board for the industry in the US and will be an nearly unfair comparison".

"Tesla is just all about the long-term potential of the company", David Whiston, an analyst with Morningstar Chicago, said by phone ahead of Ford's earnings release.

  • Wendy Palmer