Ford's 1Q profit falls 39 percent; shares drop

Published on NewsOK Modified: April 25, 2014 at 2:23 pm •  Published: April 25, 2014
Advertisement
;

DEARBORN, Mich. (AP) — Results at Ford Motor Co. could test investors' willingness to hang in during a year of lower profits on the promise of better returns ahead.

Ford said Thursday its first-quarter net income fell 39 percent to $989 million, or 24 cents per share. That's down from $1.64 billion, or 41 cents per share, in the January-March period a year ago.

Dearborn-based Ford had warned that this year would be leaner than 2013, when it enjoyed a near-record pretax profit of $8.65 billion. It's a transition year for the company, which is launching a record 23 vehicles worldwide and building seven plants, including four in China.

That means a lot of up-front costs that won't immediately pay off. For example, Ford is halting production at its U.S. truck plants for 13 weeks this year to prepare for the launch of the new aluminum-clad F-150. It won't see substantial sales of the truck until next year.

The results also held some surprises for investors, including a $400 million contribution to Ford's warranty reserves and $100 million in higher shipping costs and other weather-related charges from the brutal winter.

Excluding a charge for plant closings in Europe, Ford earned 25 cents. That was far short of Wall Street's expectations. Analysts polled by FactSet forecast earnings of 31 cents per share. Ford's shares fell 3.3 percent to $15.78 in afternoon trading.

Chief Financial Officer Bob Shanks promised that results will improve in subsequent quarters. Ford still expects a full-year pretax profit in the $7 billion to $8 billion range despite volatility in South America, Russia and Turkey, he said.

"We feel that we're moving forward very nicely in what we expect for the year, and it's setting us up for stronger growth and stronger profitability in 2015," Shanks told reporters Friday.

Revenue rose slightly to $35.9 billion. Worldwide sales were up 6 percent to nearly 1.6 million.

Most analysts were resigned to slogging through 2014 with Ford on the expectation of an upside next year.

"We think Ford is on track for meaningful net income improvement in 2015," said S&P Capital IQ analyst Efraim Levy, who has a "Buy" opinion on Ford's shares.