Ford is rolling out numerous new models in Europe including an expanded Transit van line

Ford is rolling out numerous new models in Europe including an expanded Transit van line

Ford's first quarter 2014 pre-tax profit fell US$765m year on year to $1.4bn while net income of $989m was down $622m including pre-tax special charges of $122m, mostly for restructuring in Europe.

Vehicle unit sales were 1.59m versus 1.5m and revenue rose $0.3bn to $35.9bn.

The company maintained its full year pre tax profit forecast of $7bn.

Ford said increased recall and warranty costs in North America and adverse currency exchange rates in Venezuela reduced Q1 pre-tax profit by about $900m.

"While similar factors could occur in the future, it is unusual for items like these to occur in this magnitude in the same quarter," the automaker said.

The Asia Pacific region saw a record quarterly profit, North America and Middle East & Africa were profitable, Europe losses fell by more than half and South America incurred larger losses compared with a year ago. Ford Credit once again "delivered solid results".

 First quarter wholesale volume was up 6% and revenue improved about 1% year on year. The company continued market share gains in Asia Pacific, including record market share in China.

"We had a solid quarter, and we are on track with our most aggressive product launch schedule in our history,” said Alan Mulally, president and CEO.

North America pre-tax profit fell $892m to $1.5bn with Ford highlighting $500m in warranty and weather-related costs.

Wholesale volume and revenue declined 2% and 5%.

South America reported a pre-tax loss of $510m, up $292m on Q1 2013's loss due to currency effects, higher costs due to high local inflation and lower volume due to a weaker industry.

Wholesale volume and revenue decreased by 8% and 18%.

Ford now expects South America to incur a larger loss than in 2013 ranging from break even to a small loss.

The pre-tax loss in Europe reduced $231m to $194m thanks to lower costs and favorable exchange.

Wholesale volume and revenue improved 11% and 18%, respectively as industry volumes rose.

Ford continues to expect the region to be profitable in 2015.

Middle East & Africa reported a profit of $54m for the first quarter, up $7m year on year.

But wholesale volume and revenue declined from a year ago as dealers altered stock policy and there were also adverse currency effects.

Asia Pacific improved $291m to $319m pretax profit, setting a record.

Wholesale volume was up 32% and net revenue grew 19%.

Wholesale volume in China increased 45%.

In the first quarter, total company production rose 46,000 units to 1.6m, 3,000 more than forecast.

Second quarter production is forecast up 32,000 to 1.7m due to Asia Pacific demand.

Ford Credit’s first quarter pre-tax profit of $499m was largely flat.

Show the press release

FORD POSTS FIRST QUARTER 2014 PRE-TAX PROFIT OF $1.4 BILLION, NET INCOME OF $989 MILLION; GLOBAL NEW PRODUCT LAUNCHES ON TRACK+

  • First quarter pre-tax profit of $1.4 billion, a decrease of $765 million compared with a year ago; after-tax earnings per share of 25 cents, excluding special items; 19th consecutive profitable quarter
  • First quarter net income of $989 million, or 24 cents per share, a decrease of $622 million compared with a year ago, including pre-tax special item charges of $122 million 
  • Solid results overall; quarter adversely impacted by several significant factors not representative of underlying business run rate
  • Automotive operating-related cash flow of $1.2 billion. Ford ended first quarter with Automotive gross cash of $25.2 billion, exceeding debt by $9.5 billion, and a strong liquidity position of $36.6 billion
  • Wholesale volume and revenue both increased from a year ago, with continued market share gains in Asia Pacific, driven by record market share in China
  • Asia Pacific reported record profit for any quarter; North America and Middle East & Africa were profitable; Europe reduced its loss by more than half and South America incurred a larger loss compared with a year ago
  • Ford Credit once again delivered solid results
  • Ford affirms its full-year pre-tax profit guidance of $7 billion to $8 billion as it launches 23 new global vehicles, the most in a single year in its history; Automotive revenue to be about the same as last year; Automotive operating margin to be lower; and Automotive operating-related cash flow to be positive but substantially lower than 2013

 

                         
Financial Results Summary+
 
First Quarter
 
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
 
1,497
 
 
1,589
 
 
92
 
Revenue (Bils.)
 
$
35.6
 
 
$
35.9
 
 
$
0.3
 
Operating Results
 
 
 
 
 
 
 
Pre-tax results (Mils.)++
 
$
2,146
 
 
$
1,381
 
 
$
(765
)
After-tax results (Mils.)++
 
1,642
 
 
1,019
 
 
(623
)
Earnings per share++
 
0.41
 
 
0.25
 
 
(0.16
)
Special items pre-tax (Mils.)
 
$
(23
)
 
$
(122
)
 
$
(99
)
Net income attributable to Ford
 
 
 
 
 
 
 
After-tax results (Mils.)
 
$
1,611
 
 
$
989
 
 
$
(622
)
Earnings per share
 
0.40
 
 
0.24
 
 
(0.16
)
Automotive
 
 
 
 
 
 
 
Operating-related cash flow (Bils.)
 
$
0.7
 
 
$
1.2
 
 
$
0.5
 
 
 
 
 
 
 
 
Gross cash (Bils.)
 
$
24.2
 
 
$
25.2
 
 
$
1.0
 
Debt (Bils.)
 
(16.0
)
 
(15.7
)
 
0.3
 
  Net cash (Bils.)
 
$
8.2
 
 
$
9.5
 
 
$
1.3
 
See end notes on page 8.
 
DEARBORN, Mich., April 25, 2014 — Ford Motor Company [NYSE: F] today reported a 2014 first quarter pre-tax profit of $1.4 billion, its 19th consecutive profitable quarter. The company also affirmed its full-year pre-tax profit guidance of $7 billion to $8 billion as it launches 23 new global vehicles, the most in a single year in its history.
 
The company’s pre-tax profit of $1.4 billion was $765 million lower than a year ago. After-tax earnings per share were 25 cents, excluding special items, 16 cents below a year ago. Net income for the quarter was $989 million, or 24 cents per share, a decline of $622 million, or 16 cents, from a year ago. Net income included pre-tax special item charges of $122 million for separation-related actions, primarily to support the European transformation plan.
 
The company’s results were adversely affected by several significant factors that were not representative of its underlying business run rate. In North America, these included warranty reserve increases for field service actions for prior models, including safety recalls and other product campaigns, and weather-related costs. For South America, these included balance sheet currency exchange effects.
 
In total, these factors reduced first quarter pre-tax profit by about $900 million, or the equivalent of 17 cents per share. They also account for a year-over-year decline in company pre-tax profit of $700 million. While similar factors could occur in the future, it is unusual for items like these to occur in this magnitude in the same quarter.
 
Among the business units, Asia Pacific reported a record quarterly profit, and North America and Middle East & Africa were profitable. Europe reduced its loss by more than half and South America incurred larger losses compared with a year ago. Ford Credit once again delivered solid results.
 
First quarter wholesale volume was up 6 percent and revenue improved about 1 percent from a year ago. The company had continued market share gains in Asia Pacific, including record market share in China.
 
Ford’s Automotive operating-related cash flow was $1.2 billion in the first quarter. The company ended the first quarter with Automotive gross cash of $25.2 billion, exceeding debt by $9.5 billion, and a strong liquidity position of $36.6 billion, an increase of $400 million from year-end 2013.
 
Although not yet included in the company’s total liquidity, Ford is in the process of amending and extending its revolving credit facility. The facility is expected to grow to about $12 billion from $10.7 billion after its anticipated completion at the end of this month. This will improve further the company’s strong liquidity position as it expands globally. Consistent with its capital and funding strategy, Ford plans to allocate $2 billion of the facility to Ford Credit to support its liquidity.
 
“We had a solid quarter, and we are on track with our most aggressive product launch schedule in our history,” said Alan Mulally, president and CEO. “Our One Ford plan continues to deliver as we serve customers in more markets around the world with a full family of vehicles committed to best-in-class quality, fuel efficiency, safety, smart design and value.”
 
In the first quarter, Ford increased its quarterly dividend by 25 percent and paid about $500 million in dividends.
 
AUTOMOTIVE SECTOR
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
1,497
 
 
 
1,589
 
 
 
92
 
 
Revenue (Bils.)
$
33.9
 
 
 
$
33.9
 
 
 
$
 
 
Operating Margin (Pct.)
5.2
 
%
 
3.4
 
%
 
(1.8)
 
pts.
Pre-tax results (Mils.)
$
1,643
 
 
 
$
919
 
 
 
$
(724
)
 
 
Total Automotive first quarter wholesale volume increased by 6 percent from a year ago, while Automotive revenue was unchanged. The higher volume is more than explained by higher industry volumes in all regions except South America, improved market share in Asia Pacific and a favorable change in dealer stocks.
 
The decrease in operating margin and pre-tax profit for the first quarter is more than explained by lower results in North America and South America.
 
The company’s Automotive sector now has five reportable segments, up from four previously. The new segment of Middle East & Africa was formed to facilitate an increased focus on this important growth region. Total Automotive results are not affected by this change. The 2013 first quarter results of each of the five Automotive segments have been revised to reflect the new reporting structure.
 
“The underlying run rate of our business in the first quarter was strong,” said Bob Shanks, executive vice president and chief financial officer. “We are particularly encouraged by Asia Pacific’s record profit, driven by very positive customer response to our new products, underscoring the traction and success of our growth plans in what is now the largest market in the world. In addition, the improvement in Europe confirms the progress we continue to make toward achieving a profit in 2015.”
 
North America
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
735
 
 
 
717
 
 
 
(18
)
 
Revenue (Bils.)
$
21.5
 
 
 
$
20.4
 
 
 
$
(1.1
)
 
Operating Margin (Pct.)
11.1
 
%
 
7.3
 
%
 
(3.8
)
pts.
Pre-tax results (Mils.)
$
2,392
 
 
 
$
1,500
 
 
 
$
(892
)
 
 
North America results were driven by robust industry sales, a strong product lineup, continued discipline in matching production to demand and a lean cost structure, even as the company continued investment for future growth.
 
North America reported a pre-tax profit of $1.5 billion in the first quarter, a decline of $892 million from last year’s record profit. The results are more than explained by unfavorable market factors and higher costs. The higher costs are more than explained by $500 million related to warranty reserve increases for field service actions and weather-related costs, as previously noted.
 
Wholesale volume and revenue declined 2 percent and 5 percent, respectively, for the first quarter. The volume decrease is primarily explained by lower market share, partially offset by higher industry sales, including a U.S. SAAR of 16 million units that was 400,000 units higher than a year ago, and favorable changes in dealer stocks. The decline in revenue mainly reflects lower wholesale volume, unfavorable mix, lower net pricing and the adverse effect of a weaker Canadian dollar.
 
First quarter U.S. market share was 15.3 percent, down 0.6 of a percentage point from a year ago. The decline reflects planned reductions in daily rental sales and lower small car retail share. Total F-Series share was unchanged from a year ago.
 
For the full year, Ford continues to expect North America pre-tax profit to be lower than 2013 and operating margin to be in the 8 percent to 9 percent range.
 
South America
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
113
 
 
 
104
 
 
 
(9
)
 
Revenue (Bils.)
$
2.3
 
 
 
$
1.9
 
 
 
$
(0.4
)
 
Operating Margin (Pct.)
(9.4)
 
%
 
(27.0)
 
%
 
(17.6
)
pts.
Pre-tax results (Mils.)
$
(218
)
 
 
$
(510
)
 
 
$
(292
)
 
 
South America continues to execute the company’s strategy of expanding its product lineup and progressively replacing legacy products with global One Ford offerings.
 
South America reported a pre-tax loss of $510 million in the first quarter, a $292 million deterioration from the prior year. The decline is explained by unfavorable exchange, including the balance sheet effects described previously; higher costs, mainly associated with economics-related effects caused by high local inflation; and lower volume, mainly due to a weaker industry.
 
In the first quarter, wholesale volume and revenue decreased by 8 percent and 18 percent, respectively, from a year ago. The lower volume is more than explained by lower industry volume, reflecting a 200,000-unit decline from last year’s SAAR of 5.9 million units. The decline includes the impact of import restrictions in Argentina and lower production in Venezuela resulting from limited availability of U.S. dollars. The revenue decline is explained primarily by unfavorable exchange and unfavorable volume and mix, offset partially by higher net pricing.
 
For the full year, Ford now expects South America to incur a larger loss than in 2013. Based on present assumptions, the company expects the rest of the year to be about breakeven to a small loss.
 
Europe
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
330
 
 
 
367
 
 
 
37
 
 
Revenue (Bils.)
$
6.6
 
 
 
$
7.8
 
 
 
$
1.2
 
 
Operating Margin (Pct.)
(6.5)
 
%
 
(2.5)
 
%
 
4.0
 
pts.
Pre-tax results (Mils.)
$
(425
)
 
 
$
(194
)
 
 
$
231
 
 
 
Ford continued to implement its transformation plan for Europe in the first quarter.
 
Europe reported a first quarter pre-tax loss of $194 million, a $231 million improvement from a year ago. The improvement reflects lower costs, favorable market factors and favorable exchange. This was partially offset by lower joint venture results and royalties in Russia and Turkey.
 
In the first quarter, wholesale volume and revenue improved from a year ago, up 11 percent and 18 percent, respectively. The volume increase is more than explained by higher industry volumes, reflecting a SAAR of 14.5 million units for Ford’s Europe 20 markets, up over 1 million units, as well as favorable changes in dealer stocks and higher market share for Europe 20. Europe’s higher revenue mainly reflects the higher volume and favorable exchange.
 
Market share for Europe 20 in the first quarter was 8 percent, an increase of 0.3 of a percentage point from a year ago, reflecting improved share for Mondeo and Kuga.
 
Ford’s full-year guidance for Europe remains unchanged, with the region expected to improve pre-tax results compared to 2013. Ford continues to expect the region to be profitable in 2015.
 
Middle East & Africa
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
54
 
 
 
51
 
 
 
(3
)
 
Revenue (Bils.)
$
1.3
 
 
 
$
1.2
 
 
 
$
(0.1
)
 
Operating Margin (Pct.)
3.7
 
%
 
4.7
 
%
 
1.0
 
pts.
Pre-tax results (Mils.)
$
47
 
 
 
$
54
 
 
 
$
7
 
 
 
The new Middle East & Africa segment reflects Ford’s increased focus on this important growth region.
 
Middle East & Africa reported a profit of $54 million for the first quarter, a $7 million improvement from a year ago.
 
In the first quarter, wholesale volume and revenue declined from a year ago. The lower volume reflects lower dealer stock increases compared with a year ago. The revenue decline is more than explained by the lower volume and unfavorable exchange, primarily due to a weaker South Africa rand.
 
Ford’s full-year guidance for Middle East & Africa remains unchanged, with the region expected to be about breakeven.
 
Asia Pacific
                             
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Wholesales (000)
265
 
 
 
350
 
 
 
85
 
 
Revenue (Bils.)
$
2.2
 
 
 
$
2.6
 
 
 
$
0.4
 
 
Operating Margin (Pct.)
(1.3)
 
%
 
11.1
 
%
 
12.4
 
pts.
Pre-tax results (Mils.)
$
(28
)
 
 
$
291
 
 
 
$
319
 
 
 
Ford’s strategy in Asia Pacific is to grow aggressively with an expanding portfolio of global One Ford products with manufacturing hubs in China, India and ASEAN.
 
Asia Pacific reported a first quarter pre-tax profit of $291 million, an improvement of $319 million compared with a year ago, and a record for any quarter. The improvement is more than explained by favorable volume and mix and higher royalties from joint ventures. Higher costs, including investment for future growth, were a partial offset.
 
In the first quarter, wholesale volume was up 32 percent from a year ago, and net revenue, which excludes the company’s China joint ventures, grew 19 percent. Wholesale volume in China increased by 45 percent from a year ago. The higher volume in the region reflects mainly improved market share, as well as higher industry volume. Ford estimates the first quarter SAAR for the region was 38.9 million units, up 1.9 million units from a year ago, explained by China. Higher revenue is more than explained by favorable mix and higher volume.
 
First quarter market share in the region was 3.4 percent, 0.7 of a percentage point higher than a year ago. The improvement was driven by China, where Ford’s market share improved 0.9 of a percentage point to a record 4.5 percent, reflecting continued strong sales of EcoSport, Kuga and Mondeo.
 
For the full year, Ford now expects Asia Pacific to earn a higher pre-tax profit than a year ago.
 
Other Automotive
 
The first quarter loss of $222 million in Other Automotive reflects net interest expense and an unfavorable fair market value adjustment on the company’s investment in Mazda.
 
For the full year, Ford now expects net interest expense to be about $700 million, a $100 million improvement from prior guidance reflecting higher interest income.
 
PRODUCTION VOLUMES*
                     
 
 
2014
 
 
First Quarter
 
Second Quarter
 
 
Actual
 
Forecast
 
 
Units
 
O/(U) 2013
 
Units
 
O/(U) 2013
 
 
(000)
 
(000)
 
(000)
 
(000)
North America
 
774
 
(10
)
 
810
 
(10
)
South America
 
94
 
(17
)
 
105
 
(29
)
Europe
 
382
 
(4
)
 
405
 
4
 
Middle East & Africa
 
17
 
2
 
 
20
 
3
 
Asia Pacific
 
346
 
75
 
 
360
 
64
 
  Total
 
1,613
 
46
 
 
1,700
 
32
 
* Includes production of Ford brand and JMC brand vehicles to be sold by unconsolidated affiliates.
 
In the first quarter, total company production was about 1.6 million units, 46,000 units higher than a year ago. This is 3,000 units higher than Ford’s most recent guidance.
           The company expects second quarter production to be 1.7 million units, up 32,000 units from a year ago, more than explained by higher volume in Asia Pacific. Compared with the first quarter, second quarter production is up 87,000 units.                                     
 
FINANCIAL SERVICES SECTOR
                       
 
First Quarter
 
2013
 
2014
 
B/(W) 2013
Revenue (Bils.)
$
1.7
 
 
$
2.0
 
 
$
0.3
 
Ford Credit pre-tax results (Mils.)
$
507
 
 
$
499
 
 
$
(8
)
Other Financial Services pre-tax results (Mils.)
(4
)
 
(37
)
 
(33
)
  Financial Services pre-tax results (Mils.)
$
503
 
 
$
462
 
 
$
(41
)
 
Ford Motor Credit Company
 
Ford Credit’s first quarter pre-tax profit of $499 million was largely unchanged from a year ago.
 
Ford Credit reported higher volume, reflecting increases in nearly all products globally, largely offset by unfavorable residual performance in North America.
 
For the full year, Ford now expects Ford Credit pre-tax profit to be about equal to or higher than 2013. This reflects improved financing margin performance.
 
 
OUTLOOK
 
                             
2014 KEY METRICS -- BUSINESS UNITS
 
 
 
Memo:
 
2013
 
2014 Full Year
 
2014
 
Full Year
 
Compared with 2013
 
First Quarter
 
 
Results
 
Plan
 
Outlook
 
Results
 
 
(Mils.)
 
 
 
 
 
(Mils.)
 
Automotive *
 
 
 
 
 
 
 
 
 
 
North America **
$
8,809
 
 
 
Lower
 
On Track
 
$
1,500
 
 
 
- Operating Margin
10.2
 
%
 
8 - 9%
 
On Track
 
7.3
 
%
 
South America
$
(33
)
 
 
About Equal
 
Lower
 
$
(510
)
 
 
Europe
(1,442
)
 
 
Better
 
On Track
 
(194
)
 
 
Middle East & Africa
(69
)
 
 
About Breakeven
 
On Track
 
54
 
 
 
Asia Pacific
327
 
 
 
About Equal
 
Higher
 
291
 
 
 
Net Interest Expense
(801
)
 
 
About Equal
 
About $(700) million
 
(163
)
 
 
Ford Credit
$
1,756
 
 
 
About Equal
 
About Equal/Higher
 
$
499
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Excludes special items
 
 
 
 
 
 
 
 
 
**
Full year 2013 North America pre-tax results include a $39 million favorable revision related to a change in accounting for U.S. and Canada employee disability benefits
 
                             
2014 PLANNING ASSUMPTIONS AND KEY METRICS
 
Memo:
 
 
2013
 
2014
 
2014
 
 
Full Year
 
Full Year
 
First Quarter
 
 
Results
 
Plan
 
Outlook
 
Results
 
Planning Assumptions (Mils.)
 
 
 
 
 
 
 
 
 
 
Industry Volume * -- U.S.
15.9
 
 
 
16.0 - 17.0
 
On Track
 
16.0
 
 
 
                              -- Europe 20
13.8
 
 
 
13.5 - 14.5
 
14.0 - 15.0
 
14.5
 
 
 
                              -- China
22.2
 
 
 
22.5 - 24.5
 
On Track
 
22.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Metrics
 
 
 
 
 
 
 
 
 
 
Automotive (Compared with 2013):
 
 
 
 
 
 
 
 
 
 
  - Revenue (Bils.)
$
139.4
 
 
 
About Equal
 
On Track
 
$
33.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  - Operating Margin **
5.4
 
%
 
Lower
 
On Track
 
3.4
 
%
 
 
 
 
 
 
 
 
 
 
 
 
  - Operating-Related Cash Flow (Bils.) ***
$
6.1
 
 
 
Substantially Lower
 
On Track
 
$
1.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ford Credit (Compared with 2013):
 
 
 
 
 
 
 
 
 
 
  - Pre-Tax Profit (Bils.)
$
1.8
 
 
 
About Equal
 
About Equal/Higher
 
$
0.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company:
 
 
 
 
 
 
 
 
 
 
  - Pre-Tax Profit (Bils.) ***
$
8.6
 
 
 
$7 - $8 Billion
 
On Track
 
$
1.4
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Based, in part, on estimated vehicle registrations; includes medium and heavy trucks
**
Automotive operating margin is defined as Automotive pre-tax results, excluding special items and Other Automotive, divided by Automotive revenue
***
Excludes special items; see "Income from Continuing Operations" and “Operating-Related Cash Flows Reconciliation to GAAP” tables on pages 11 and 13
 
ONE FORD PLAN
 
Ford remains focused on delivering the key aspects of the One Ford plan, which are unchanged:
Aggressively restructuring to operate profitably at the current demand and changing model mix
Accelerating the development of new products that customers want and value
Financing the plan and improving the balance sheet
Working together effectively as one team, leveraging Ford’s global assets
 
“2014 is shaping up to be another solid year for the Ford Motor Company,” said Mulally. “Importantly, this year also is a critical next step in implementing our One Ford plan and delivering profitable growth.”
 
# # #

Original source: Ford