Ford Earnings, Revenue Beat Forecasts
Ford Motor's third quarter profit dropped slightly as the company took a charge for hedging on commodities, but sales rose and the results beat Wall Street's forecasts.
Ford said Wednesday it earned $1.6 billion in the third quarter, down 2 percent from a year ago. Ford's earnings amounted to 41 cents per share. That compares with earnings of 43 cents per share in the July-September period a year ago. (Get the latest quote for Ford Motors here.)
Ford took a $350 million non-cash charge to reflect falling prices of some commodities like copper and aluminum. Copper prices fell 25 percent in September alone, Ford said. Ford said the charges could reverse if commodity prices rise in the future.
Without one-time items, including personnel reductions and continuing dealer payments and other costs for last year's closure of the Mercury brand, Ford earned 46 cents per share. That beat Wall Street's expectations. Analysts polled by FactSet forecast earnings of 45 cents per share.
The country's second largest automaker says revenue was $33.1 billion, up 14 percent from last year's revenue of $29 billion. Revenue topped analysts' estimate of $29.9 billion.
Ford reported a pretax profit of $1.6 billion in North America, unchanged from a year ago. Higher prices and rising sales of more profitable vehicles like pickup trucks helped offset higher costs for materials. Ford lost money in Europe and Asia, where it recently embarked on an aggressive four-year expansion plan.
Ford has had a string of positive financial news in recent weeks. Ford workers approved a new four-year contract with the United Auto Workers that will increase the company's labor costs by less than 1 percent each year. Ford expects to add 5,750 new workers in the U.S. under the contract, but they will make lower wages than Ford's longtime factory workers.
As a result of the contract vote, Standard & Poor's and Fitch ratings agencies upgraded Ford's credit ratings to one notch below investment grade. The upgrade will lower Ford's borrowing costs and bring it closer to achieving investment-grade status, which it lost in 2005 when it was deeply in debt.
Ford's debt now stands at $12.7 billion. The company repaid $1.3 billion during the third quarter. It has said it wants to reduce its total debt to $10 billion by mid-decade.
Investors hope Ford's improving fortunes will convince the automaker to reinstate its dividend. Ford hasn't paid a quarterly dividend since 2006.
Chief Financial Officer Lewis Booth said the company is focused on improving its finances. "We want to return to paying a dividend as soon as we think our balance sheet can stand it," Booth said.
The company gave no indication as to whether it would resume paying out a dividend.
The good financial news was overshadowed somewhat by Consumer Reports' announcement earlier this week that Ford fell 10 spots in its new reliability rankings. Consumer Reports said its subscribers complained about glitchy touch screens and transmissions. Ford now ranks 20th out of 28 major brands.
Booth said the company was disappointed in the rankings, but noted that some of its vehicles, like the midsize Ford Fusion, performed well. He said the company has had some trouble with new vehicles, including the Ford Focus.
"We've made no secret that we're working our way through those issues," he said.