Ford’s lower profit beats estimates

Ford yesterday reported a 34 per cent drop in third-quarter earnings, and revenue fell due to the cost of introducing the F-150 pickup truck.

Ford, which affirmed its full-year profit outlook, said earnings suffered from lower wholesale vehicle volumes and recall costs, as well as supplier parts shortages. While a strong performance in North America helped push earnings above Wall Street estimates, analysts and investors were not impressed.

Ford continued to lose money in Europe and in South America while being profitable in Asia as well as North America.

The loss in Europe widened to $439 million from $182 million a year ago, mainly due to weakness in Russia.

Ford continued its gains in China, where it reached 4.7 per cent market share, its highest yet.

Net income fell to $835 million from $1.27 billion a year earlier.

Excluding one-time items, Ford reported earnings of 24 cents per share, which beat expectations of 19 cents from analysts.

Ford's profit margin of 7.1 per cent in North America lagged the 9.5 per cent that rival General Motors reported on Thursday. Excluding recall costs, Ford's margin would have been 10.2 per cent.

Higher vehicle prices added nearly $600 million to Ford’s earnings, almost half of that derived from North America.

Ford last month warned that its pretax profit this year would be $6 billion, down from a previous forecast of $7 billion to $8 billion, and that recall costs in North America would be $1 billion. About $630 million of those costs came in the third quarter.

"No compelling new reason to either buy or sell the stock," Morgan Stanley analyst Adam Jonas said in a research note. "On the substance of the results and outlook itself, we don't believe consensus forecasts need to change materially."

Shares of Ford were off 3 per cent at $13.97 in early trading.