Ford profit falls on strong dollar, lower sales
Ford Motor Company's net income fell in the first quarter, hurt by lower sales of key vehicles like the F-150 pickup and a stronger US dollar.
But the Dearborn automaker says the picture should improve as the year progresses, and it's still aiming for a full-year pretax profit of US$8.5 billion to US$9.5 billion, up from US$6.3 billion in 2014.
"We feel we are very much on track to that breakthrough year we talked about," Chief Financial Officer Bob Shanks said Tuesday.
Ford's net income fell 6.6 per cent to US$924 million in the January-March period. First-quarter earnings of 23 cents per share compared with earnings of 25 cents per share in the same quarter a year ago.
The results fell short of Wall Street's expectations. Analysts surveyed by FactSet forecast earnings of 26 cents per share.
One reason for the miss: Analysts forecast a tax rate of 29 per cent for the quarter, but Ford's actual rate was 34 per cent. That difference was worth about 2 cents per share, the company said.
Revenue fell by five per cent, or US$2 billion, to US$33.9 billion. That also fell short of forecasts of US$34.3 billion.
Shanks said 70 per cent of the drop in revenue or around US$1.4 billion was related to the strong US currency. The dollar has climbed eight per cent so far this year against the euro and other major currencies. Last week, General Motors Company said that currency exchange cost it US$1.8 billion in first-quarter revenue.
Ford's global sales fell one per cent to 1.6 million. Sales rose in Asia and Europe but fell in North America, South America and the Middle East and Africa.
Ford said the continuing launch of its new F-150 pickup, which went on sale late last year, hurt North American sales because dealers don't yet have a full inventory. Two plants make the F-150, in Michigan and Missouri, but only the Michigan plant was fully operational in the first quarter after a longer than usual changeover to make the truck's body out of aluminium instead of steel. Ford's Kansas City plant started making the new truck on March 13.
Shanks said F-150 sales were down 40 per cent for the quarter, or about 60,000 vehicles, and dealers aren't expected to have normal levels of trucks on their lots until this summer.
Ford is also struggling to sell small cars in the United States, China and elsewhere.