Wednesday, 23 September 2020

Ford posts lower third-quarter profit

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DEARBORN: Ford Motor Co on posted a lower quarterly profit as it took charges for its global restructuring, and reduced its full-year operating profit forecast due to higher warranty and incentive costs, as well as lower-than-expected sales in China.

The revised forecast sent shares down 3.4pc to $8.90 in after-hours trading.

Ford Chief Financial Officer Tim Stone blamed the lower profit outlook on intense competition in its two largest markets, North America and China.

“We’re seeing higher warranty,” he told reporters. “We’re seeing North American incentive environment greater than planned. And in China, lower volumes and (joint venture) profitability.”

The third quarter included $1.5 billion in costs for the company’s global restructuring, $800 million of which was related to the formation of a joint venture in India with Mahindra & Mahindra.

Ford’s ongoing restructuring includes cutting costs and overhauling its product lineup in key global markets like China and Europe.

As of Wednesday, Ford so far had recorded only $3.3 billion of the projected $11 billion in charges it previously said it would take for the global restructuring, up from $2.2 billion at the end of the second quarter.

The No. 2 US automaker still faces the prospect of negotiating a new four-year labor agreement with the United Auto Workers following the union’s more than month-long strike against General Motors Co that cost it about $2 billion according to analysts.

Ford on Wednesday reported a third-quarter net profit of $425 million, or 11 cents a share, compared with $991 million, or 25 cents a share, a year earlier.

Excluding one-time charges, Ford earned 34 cents a share, above the 26 cents analysts had expected according to IBES data from Refinitiv.

Revenue in the quarter fell 2pc to $37 billion, above the $33.98 billion expected.

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