Ford’s 1Q net income doubles on truck, SUV sales

DEARBORN, Mich. – Ford Motor Co.’s net income more than doubled to $2.5 billion in the first quarter on strong sales of trucks and SUVs worldwide.

The company’s pretax profit of $3.8 billion was an all-time record for any quarter. Pretax profits more than doubled in North America and Asia. Europe recorded its best quarter since 2008.

“Essentially everything has improved,” Chief Financial Officer Bob Shanks said. Shanks said Ford expects to meet or exceed last year’s record pretax profit of $10.8 billion.

Worldwide sales rose 10 per cent to 1.7 million in the first quarter. Demand for SUVs, trucks and commercial vans was insatiable in North America, China and Europe, offsetting a 29-per cent decline in sales in Brazil and weaker sales in the Middle East and Africa. Ford’s SUV sales jumped 38 per cent in China during the first quarter. In Europe, sales of Ford’s EcoSport small SUV rose 50 per cent.

In North America, Ford reaped the benefits of its newly redesigned F-150 pickup truck. The company struggled in the first quarter of 2015 because it was still ramping up production of the F-150, which has long been the bestselling vehicle in the U.S. This year, with normal inventory at dealerships, U.S. F-Series sales rose 5 per cent. U.S. sales of the Ford Explorer SUV rose 39 per cent in the first quarter, while sales of the Transit commercial van jumped 46 per cent.

Ford’s results trounced Wall Street’s forecasts. The Dearborn, Michigan-based automaker earned 61 cents per share in the January-March period, up from 29 cents a year ago. Excluding one-time items, like buyout payments for North American workers, Ford earned 68 cents per share. Analysts polled by FactSet forecast earnings of 47 cents per share.

Ford’s revenue rose 11 per cent to $37.7 billion. Analysts had forecast revenue of $35.59 billion.

Ford shares rose 50 cents, or 3.6 per cent, to $14.16 in afternoon trading Thursday.

Shareholders reacted, in part, to CEO Mark Fields’ confirmation that Ford is working on an electric vehicle with a 200-mile range that could match rivals from General Motors Co. and Tesla Motors. Fields didn’t say when the company might release such a vehicle, but said Ford will be competitive.

“Our approach, very simply, is we want to make sure that we’re either among the leaders or in a leadership position,” Fields told media and analysts on a conference call.

Sales of higher-profit SUVs and trucks helped lift Ford’s operating margin to a record 9.8 per cent. Fields said 60 per cent of vehicles sold in Europe during the quarter were from the highest trim levels, meaning customers added to Ford’s bottom line by opting for luxuries like heated seats.

Ford reported a record operating margin of 12.9 per cent in North America, but that will likely decline as the year progresses. Ford takes a hit each summer when it shuts down its plants for vacation and maintenance, and it’s also facing the expensive launch of its Super Duty pickups this fall. Ford expects its North American margin to end the year at 9.5 per cent or higher.

Ford earned $3.1 billion in North America in the first quarter, more than double its performance a year ago. Its sales rose 20 per cent in the region, but profits were somewhat offset by higher incentives.

Ford earned $434 million in Europe, a turnaround from a loss of $42 million a year ago. European sales were up 6 per cent.

The company earned $220 million in its Asia Pacific region, more than double its pretax profit a year ago. Sales in that region rose 9 per cent.

Ford said its sales dropped 38 per cent in South America, which is plagued by economic instability. The company lost $256 million in the region, or 35 per cent more than the same quarter a year ago. Ford also lost $14 million in its Middle East and Africa region, where sales were hurt by low oil prices and weak currencies.