Ford posts strong 3rd-qtr. profits on N.A., pricing
DETROIT -- Propelled by its thriving North American operations and strong worldwide pricing, Ford Motor Co. racked up record pretax profits in the third quarter even though its share dropped in several key markets.
Improved net pricing -- the combination of higher prices and lower discounts -- was the single biggest reason Ford's third-quarter pretax profit rose 11 percent from a year earlier to a record $2.16 billion. Net profit fell 1 percent to $1.63 billion on a higher tax rate, as revenues fell 3 percent to $32.1 billion.
In North America, Ford's pretax operating profit surged 50 percent to a record $2.33 billion, for an operating-profit margin of 12 percent, also a record and the third quarter in a row that North American margins topped 10 percent. Automakers generally aim for margins above 5 percent, and few achieve margins above 10 percent.
"North America had positive volume and mix and positive net pricing," said CFO Bob Shanks.
Stronger pricing in North America -- where Ford's unit sales rose, though less than the overall market -- was in line with recent trends. But net pricing also rose in each of Ford's operating regions.
"Even in Europe we eked out positive net pricing" in spite of a brutal incentive environment, Shanks said. In Europe, Ford's pretax operating loss widened to $468 million from $306 million a year earlier, as unit sales and revenues tumbled.
Two weeks ago Ford said it plans to close three European factories and increased its estimate of full-year losses in the region to $1.5 billion, up from a previous forecast of a $1 billion loss.
In the latest quarter, Ford's market share fell in Europe, North America and South America. Ford's share rose only in the Asia Pacific Africa region, where Ford is adding plant capacity, especially in China.
Jesse Toprak, senior analyst for TrueCar.com, said Ford has been a major beneficiary of an industry trend. Customers are buying more high-trim-level vehicles and loading them with options, even when they're moving down to smaller vehicles.
Toprak said: "That's the trend that's helping all the automakers, but it's helping Ford especially because they have a better presence in small-vehicle segments and they were smart enough to offer trim levels for every need and budget."
You can reach Bradford Wernle at firstname.lastname@example.org.