Ford third quarter 2011 net income fell US$38m year on year to $1.6bn, or 41 cents per share.
Pre-tax operating profit fell $111m to $1.9bn, or 46 cents per share as improved automotive results were more than offset by anticipated reductions in financial services.
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Automotive pre-tax operating profit was reduced by about $350m for unrealised mark-to-market adjustments on commodity hedges for future periods. These adjustments occurred because of the significant decline in commodity prices near the end of September. This is a non-cash charge that will either reverse should commodity prices increase or be offset by the benefit of lower commodity prices in the future.
For the first nine months, Ford earned a pre-tax operating profit of $7.7bn, net income of $6.6bn and reported automotive operating-related cash flow of $4.9bn, growing volume and revenue during the period.
Third quarter net income was affected by unfavourable special items of $98m including personnel reduction, the cost of axing Mercury and other dealer-related items in North America.
Third quarter Ford Credit pre-tax operating profit was off $185m to $581m consistent with previous guidance.
Third quarter total automotive pre-tax profit was up $45m to $1.3bn. North America and South America reported pre-tax profits for the third quarter, while Europe and Asia Pacific and Africa posted losses for the period.
Ford’s third quarter revenue was up $4.1bn to $33.1bn and the automaker generated positive automotive operating-related cash flow of $400m in the quarter.
“We delivered solid results for the third quarter despite an uncertain business environment,” said Alan Mulally, Ford president and CEO.
“We remain well on track to deliver improved full year pre-tax operating profit and automotive operating-related cash flow, consistent with our guidance,” said CFO Lewis Booth. “Our liquidity remains strong, and we will continue to take actions when appropriate to strengthen our balance sheet.”
Total vehicle wholesales in the third quarter were 1.3m units, up 93,000 units.
North America reported a pre-tax operating profit of $1.6bn, essentially unchanged. South America reported a pre-tax operating profit of $276m compared with $241m a year ago.
Europe reported a larger pre-tax operating loss of $306m, compared with a loss of $196m a year ago. Asia Pacific Africa reported a pre-tax operating loss of $43m, compared with a profit of $30m.
Financial Services reported a pre-tax operating profit of $605m, a decrease of $156m.
In the first nine months of 2011, the seasonally adjusted annual rate of sales was 12.8m in the U.S. and 15.3m in the 19 markets Ford tracks in Europe. Based on the latest outlook for industry volumes, Ford now forecasts the US full year industry volume at 13m units, compared with a range of 13m to 13.5m units previously. For the 19 markets in Europe, Ford now forecasts the industry volume at 15.2m units, compared with a previous range of 14.8m to 15.3m units.
It noted that vehicle quality remains mixed “due to some near-term issues in North America, which Ford is addressing. The company also said it is on track to achieve quality improvements in its international operations.
The company expects its full year US total market share, its US retail share and European market share to be equal to or improved from 2010. In the first nine months, Ford’s US total market share was 16.5%, its US retail share was 13.9% and European market share was 8.3%.
Ford expects total company fourth quarter production to be about 1.4m units, up 22,000 units from a year ago. Fourth quarter production in Asia Pacific Africa is being affected by flooding in Thailand. Although the company’s joint venture Auto Alliance Thailand assembly plant is not affected, the flood is causing parts shortages that have forced it to suspend production.
