Ford booked net income of US$924m on revenue of $33.9bn in the first quarter of 2015, down $65m and $2bn respectively. Pretax profit rose $24m to $1.4bn. Wholesale unit volume fell 21,000 to 1,568,000.
North America operating margin rose 0.2 points to 3.6% and pretax profit $17m to $936m.
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Ford expects North America to have a very strong year in 2015, with substantial top-line growth, higher pre-tax profit, and an improved operating margin. In the quarter, the launch of the F-150 and Edge drove lower market share and lower dealer stock increases.
As a result, wholesale volume was down 2% to 678,000 from a year ago which drove the pre-tax profit lower than 2014. In addition to volume, revenue was also adversely impacted by the eff?ect of the strong US dollar on Canada and Mexico, although these factors were o?ffset largely by higher net pricing and favourable mix.
South America margin was minus 12.5%, down 14.5 points and the pretax loss of $189m was better by $321m than a year ago. Wholesale volume in the quarter was down 3% to 101,000 due to lower industry sales. This, along with weaker currencies and adverse mix, resulted in a 20% decline in revenue. Pre-tax results improved from a year ago reflecting primarily the non-repeat of last year’s unfavorable balance sheet exchange eff?ects of $310m in Venezuela. The eff?ect of lower industry sales was off?set by market share growth.
Europe‘s pretax loss improved $9m to $185m. In the quarter, wholesale volume improved 2% to 376,000 as a result of higher Europe 20 industry sales and higher market share but these factors were o?ffset partially by the non-repeat of last year’s dealer stock increase. The stronger US dollar explained the lower revenue. Pre-tax results were about the same as 2014. Higher industry, share, and favorable mix were o?ffset by the non-repeat of last year’s stock increase. In total, costs were about flat, including the impact of lower discount rates on pension expense. During the quarter, Ford confirmed its commitment to the Russian market.
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By GlobalDataMiddle East and Africa pretax profit improved $25m to $79m due to favorable exchange. Wholesale volume and revenue declined 8% to 47,000 and $1.1bn from a year ago. Lower volume was a result of unfavourable changes in dealer stocks while revenue reflected lower volume, as well as the impact of the stronger US dollar.
Asia Pacific pretax profit fell $188m to $103m. In the quarter, wholesale volume increased 5% from a year ago, explained by a favourable change in dealer stocks, including recovery of dealer stocks to targeted levels. Revenue, which excludes China joint ventures, declined 14%, reflecting lower volume and weaker currencies. Pre-tax profit declined primarily due to higher structural costs in support of the new products and capacity.
Guidance
Ford raised the first quarter dividend by 20% to 15 cents per share and reconfirmeds 2015 pre-tax profit guidance of $8.5bn to $9.5bn, It improved North America operating margin guidance to 8.5%-9.5% and revised South America profit guidance down in light of the “external environment”.
“The first quarter was a good start to a year in which our results will grow progressively stronger as the new products we have been launching start to pay off,” said Ford president and CEO Mark Fields.
“We are re-confirming that 2015 will be a breakthrough year for Ford as we continue accelerating our One Ford plan, delivering product excellence and driving innovation in every part of the business in a way that benefits all of our stakeholders.”
