Ford Motor Company (NYSE:F) Posts Solid Results
Pickup trucks powered Ford Motor Co to record North American results in the third quarter.
Ford earned US$2.7 billion in North America, up 89 percent from a year ago, largely on higher sales of its new F-150 pickup truck. Ford introduced the aluminum-sided truck last fall, but didn’t reach full production at its two US factories until June.
Sales of F-Series pickups _ the F-150 and its larger siblings _ reached a nine-year high, and customers paid more for them. Chief Financial Officer Bob Shanks said Ford was making an average of US$2,000 more per F-Series truck compared to a year ago.
Ford’s overall net income soared by 129 percent to US$1.9 billion. Its profit, of 48 US cents per share, compared with a profit of 27 cents in the same quarter a year ago.
Excluding one-time items, Ford earned 45 US cents per share, falling short of the 46-cent profit forecast by Wall Street, according to analysts surveyed by FactSet. Shanks said analysts had forecast a 32-percent tax rate, but Ford’s rate was 33 percent for the quarter. Ford also recorded a one-time profit of US$166 million with the public offering of Nemak, an aluminum supplier Ford has invested in.
The Dearborn-based automaker’s overall sales gained by 7 percent to 1.6 million. Sales were up in Europe, but fell in South America, the Middle East and Asia. In North America, sales jumped 16 percent.
Ford lost money in Europe, South America and the Middle East but eked out a small profit in Asia.
Ford Motor Company (Ford), incorporated on July 9, 1919, manufactures or distributes automobiles across six continents. The Company operates in two sectors: Automotive and Financial Services. Automotive sector includes North America, South America, Europe, Middle East & Africa, and Asia Pacific segments. Financial Services sector includes Ford Credit and Other Financial Services segments. Its vehicle brands include Ford, Ford-Lincoln and Lincoln. Other Financial Services includes a range of businesses, including holding companies and real estate-related activities. The Company has around 62 plants across the world. Through its wholly owned subsidiary Ford Motor Credit Company LLC, it provides automotive financing products to and through automotive dealers throughout the world.
Automotive Sector
The Company’s North America segment includes the sale of Ford and Lincoln vehicles, service parts, and accessories in North America (the United States, Canada, and Mexico). South America segment includes the sale of Ford vehicles, service parts, and accessories in South America. Europe segment includes the sale of Ford vehicles, components, service parts, and accessories in Europe, Turkey, and Russia. Middle East & Africa segment includes the sale of Ford and Lincoln brand vehicles and related service parts and accessories in the Middle East and Africa region. Asia Pacific segment includes the sale of Ford and Lincoln vehicles, service parts, and accessories in the Asia Pacific region. All of its vehicles, parts, and accessories are sold through distributors and dealers, of which are independently owned. The Company sells vehicles to its dealerships for sale to fleet customers, including commercial fleet customers, daily rental car companies, and governments. Ford also sells parts and accessories, primarily to its dealerships (which in turn sells these products to retail customers) and to authorized parts distributors (which in turn primarily sells these products to retailers). It also offers extended service contracts.
Financial Services Sector
The Company’s Financial Services sector includes its vehicle-related financing and leasing activities. The Company analyzes the results of its Financial Services sector through two segments: Ford Credit and Other Financial Services, which includes holding companies, real estate, and the financing of some Volvo vehicles in Europe. Major share of Ford Credit’s business consists of financing its vehicles and supporting its dealers.
The Company’s Ford Credit has a portfolio of finance receivables and leases, which it classifies into two portfolios: consumer and non-consumer. Finance receivables and leases in the consumer segment relate to products offered to individuals and to businesses that finance the acquisition of vehicles from dealers for personal and commercial use. The financing products include retail installment sale contracts for new and used vehicles, and leases for new vehicles to retail customers, government entities, daily rental car companies, and fleet customers. Finance receivables in the non-consumer segment relate primarily to products offered to automotive dealers. Non-Consumer Portfolio products include dealer financing, which includes wholesale loans to dealers to finance the purchase of vehicle inventory, also known as floorplan financing, as well as loans to dealers to finance working capital and improvements to dealership facilities, finance the purchase of dealership real estate, and finance other dealer programs and other financing, which is related to the sale of parts and accessories to dealers. Ford Credit operates its business in the United States and Canada through regional business centers. Ford Credit’s European operation is managed through its United Kingdom-based subsidiary, FCE Bank plc (FCE).
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