Ford has reported second quarter profit down on last year as it felt the effects of disruption at a key supplier to its F-150 pickup range in North America. It also said that it faced ‘ongoing challenges’ in China’s market and cut its 2018 profit forecast.
Ford reported its second quarter net income fell by almost half to USD1.1bn (USD2bn in Q2 2017), falling below analyst expectations.
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In May, Ford supplier Meridian Magnesium Products was hit by a fire at a Michigan (Plymouth) facility that resulted in a shortage of die-cast components parts that halted production of the Ford F-150 pickup. Q2 EBIT in North America was down USD0.6bn at USD1.8bn, due largely to the Meridian fire.
Unfavourable currency movements and higher costs resulted in a Q2 loss for Europe and Ford said it expected an EBIT loss for the region in 2018.
Ford reported a second quarter pre-tax loss of USD483m for its China operations and Ford’s struggles to boost sales in China continued. Through the first five months of 2018, Ford’s Chinese sales were down 22%. Ford said earlier this month that it will not raise prices of imported Ford and higher-margin luxury Lincoln models in China and would absorb the additional cost of tariffs on US produced models. Ford is looking for improvement in 2019 with new models for the Chinese market as well as the impact of increased localisation and lower costs.
Ford also said it is rescheduling a September investor meeting, so that ‘more specifics can be shared on global redesign and restructuring’.
“The team is making the hard decisions to raise the return of underperforming assets where we can via fitness and alternative business models, and we will disposition the rest,” said CFO Bob Shanks. “This type of profound redesign will take time, and we will communicate as decisions are made, such as exiting traditional sedan silhouettes in North America.”
Earlier this week Ford announced that it is consolidating its autonomous vehicles activities in a new division.
See also: Ford creates new organisation to accelerate AV business
