Ford profits fall by more than half with dip in US sales

Ford, buffeted by a slowing US market, posted third-quarter profit that fell by more than half while still beating analysts’ estimates because of cost-cutting and lower-than-expected marketing expenses.

Profit excluding some items was 26 cents a share, the automaker said in a statement on Thursday.

That exceeded the 20-cent average projection of 19 analysts surveyed by Bloomberg. Net income dropped to $957 million from $2.19 billion a year earlier. The automaker is spending big on its aluminum-bodied Super Duty pickup, as well as to transform itself into a mobility company that can take on tech interlopers like Uber Technologies and Alphabet' Google.

Operating cash flow for the automotive segment was a negative $2 billion for the quarter. Investors have pushed the company's shares down 16 per cent this year, with chief executive Mark Fields warning that profit would fall this year and in 2018.

"Over the next few years, Ford won't report horrible numbers, but it's not attractive for investors," said David Whiston, an analyst for Morningstar in Chicago, said before the report was released.

“The move to aluminium on the F-150 truck is great from a technology and fuel economy point of view, but it seems like they’re not getting the profitability the Street had hoped for.”

The automaker spent $600 million to recall faulty door latches, about $30 million less than it projected, and the company reaffirmed its guidance for full-year adjusted profit of about $10.2 billion.

The better than expected results in the third quarter will be offset in this year’s final three months as marketing costs rise and cost-cutting diminishes, Ford said.

Its fading fortunes contrast with General Motors which reported record third-quarter net income of $2.8 billion on Tuesday, and Fiat Chrysler which had a 29 per cent increase in earnings in the quarter and raised its profit forecast for the year to at least $6.3 billion.

Ford’s US light-vehicle sales fell 6.7 per cent in the quarter to 632,123 from 677,163 a year earlier, according to researcher Autodata.

European pretax profit of $138 million was the best third quarter since 2007. Ford’s European sales rose 6.7 per cent this year through September to 1.04 million vehicles, the biggest gain since 2009.

Britain's decision to leave the European Union will cost Ford $200 million this year and $600 million next year, chief financial officer Bob Shanks said.

- Bloomberg