Analysts and investors were left disappointed by a set of Ford financial results for the third quarter which showed lower profitability as the company was hit by losses incurred in regions around the world, especially China.
The company is also in the midst of a restructuring programme that appears to have much further to go and is at the stage of adding cost – with USD1.5bn booked in restructuring costs in Q3. For this year as whole, Ford lowered its guidance for profit as it said the fourth quarter headwinds would be stronger than previously thought. It said Q4 would see higher warranty costs, higher than planned incentives in North America, and lower volumes in China.
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Ford now says full-year company adjusted EBIT is projected at between USD6.5bn and USD7.0bn, compared with USD7.0bn in 2018. The 2019 forecast is down on previous guidance that EBIT would be in a USD7.0-7.5bn range.
Net income for the third quarter was posted at USD0.4bn, which compares with USD1.0bn in the same quarter of 2018. On the upside, Ford said that Adjusted EBIT in the quarter increased 8% to USD1.8bn and revenues for the quarter exceeded analyst expectations at USD37bn, despite problems (quality issues) for the company encountered on the launch of the new Explorer in the US where dealer deliveries were held up. Indeed, the lucrative US market continues to be a bright spot for Ford. Ford’s Q3 operating profit in North America was slightly up to just over USD2.0bn.
However, all other operating regions around the world posted quarterly losses – with China’s loss at USD281m and Europe at USD179m.
Ford is among the major OEMs having a tough time in China’s slowing car market – which is being hit by ongoing trade tensions with the US as well as an economy that was slowing anyway. Ford sales in the world’s largest market plunged by almost a third in Q3, although Ford maintains that it there are ‘signs of improvement in Ford’s China business’. The company says it has begun introducing new country-focused products while at the same time lowering costs and strengthening the dealer network and sales and marketing capabilities.
Ford also said that special items in Q3 included charges related to the proposed creation of a joint venture in India with Mahindra & Mahindra.
“Our Global Redesign is about making choices to transform our organisation, to become the world’s most trusted company and a clear leader in an era of rapid change,” said Jim Hackett, Ford president and chief executive officer. “We are getting stronger today and we have more work to do.”
See also: Platforms and timings – future Ford cars and EVs
