Ford's second-quarter earnings fell 9% to $2 billion
Ford earned $2 billion in the second quarter of this year, down 9% from a year earlier, as the long-running boom in U.S. vehicle sales showed signs of cooling.
On a per-share basis, Ford earned 52 cents per share. That fell short of Wall Street expectations, which averaged 60 cents a share among 14 analysts surveyed by Thomson Reuters.
Total revenue rose 6% to $39.5 billion, including from its Ford Credit finance unit.
Ford shares fell 9.5% to $12.53 at 10:30 a.m.
"We do think the U.S. (new vehicle market) is coming down. We think the second half will be lower than the first half," said Bob Shanks, Ford chief financial officer. "We saw higher industry incentives. In the U.S. we also saw lower auction values, particularly from smaller vehicles.
Ford Credit's pretax profit fell to $400 million from $506 million a year earlier, reflecting those lower auction prices and a moderate increase in credit losses on delinquent loans.
Ford has reduced its forecast for total U.S. vehicle sales this year from a range of 17.5 million to 18.5 million to a range of 17.4 million to 17.9 million, including heavy-duty pickups.
"We're expecting to have a weaker third-quarter, primarily due to the costs of launching the Super Duty (pickup)," said Shanks, referring to Ford's first redesign of its heavy-duty pickup truck in 19 years, including converting to an all-aluminum body like its smaller F-150 counterpart.
As expected, most of the profit came from North America, where it made $2.7 billion before taxes, but that was $135 million below the year-earlier level. Shanks said demand is leveling off.
"We delivered another strong quarter — one of our best second quarters ever — and record pretax profits for the first half of this year," said CEO Mark Fields in a statement. "We remain committed to delivering another full year of strong profitability, even as we address some new risks and market challenges around the world."
The automaker's profit margin in North America was 11.3%, down from 12.2% a year earlier. For the first half that margin was 12.1% compared with 10.2% in the first half of 2015.
In Europe, the company's operating profit nearly tripled to $467 million.
But, as General Motors warned last week, there will be a negative impact in the second half of the year as Ford makes adjustments in the wake of the United Kingdom's vote last month to leave the European Union.
"We see and impact of about $145 million in the second half from Brexit," Shanks said.
Ford has two powertrain plants in Dagenham and Bridgend with 2,100 and 1,800 employees, respectively. Including a technical center in Dunton and operations of Ford Credit, the company has about 14,000 employees in the U.K.
No decisions have been made on the future of those operations until more is known about the terms of the U.K.'s trade with the rest of Europe after leaving the EU.
The automaker also lost $8 million in its Asia Pacific operations as prices fell on many of the vehicles it sells in China.
In South America, perhaps the most difficult economic environment for the entire auto industry, Ford lost $265 million in the quarter, larger than the $185-million loss there a year earlier.
Ford booked a charge of about $100 million related to the recall of vehicles equipped with Takata air bags that are at the root of the nation's largest ever recall.
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