Ford North America Financial Results, Market Share Down In Q3140
In October, Ford Motor Company reported its third quarter 2014 financial results. The automaker posted net income of $835 million, or 21 cents per share, on revenue of $34.9 billion. And though the results mark the automaker’s 21st consecutive profitable quarter, all’s not as rosy as it would seem.
Compared to the third quarter of 2013, FoMoCo’s net income dropped $437 million, or 10 cents per share, to $835 million while revenue dropped $900 million to $34.9 billion. In effect, nearly all of the automaker’s financial metrics declined in some way. Mostly responsible for the slide is the North American division, which has traditionally carried The Blue Oval, serving as the company’s most profitable, highest-volume division.
Here’s how Ford North America fared in Q314.
Sales Volume, Market Share, Revenue
Wholesale volume was 665,000 units and revenue was $19.9 billion, down 8 percent and 6 percent, respectively.
Ford explains that the volume decrease was caused by two factors:
- Product launch effects, including five weeks of downtime in the quarter at the Dearborn Truck Plant for the 2015 F-150 launch; historically, the F-150 has been a cash cow for Ford, not only being highly profitable but also extremely high in sales and production volume.
- Supplier parts shortages
The decline in revenue is more than explained by lower wholesale volume. That lower sales volume caused Ford to drop U.S. market share 0.8 percentage points to 14.1 percent on a year-over-year basis. The decline is primarily the result of two circumstances:
- Planned reduction in daily rental sales
- Lower F-150 share as Ford prepares for the new vehicle by continuing to balance share, transaction prices and stocks
Ford North America posted a pre-tax profit of $1.4 billion, down $886 million. It was negatively affected in the quarter “by higher warranty costs and lower volume”, according to Ford.
For the full year, Ford continues to expect pre-tax profit at its North American division to be lower than 2013 and operating margin to be at the low end of the 8 percent to 9 percent range.
Not All Doom & Gloom
Despite the slipping results, not all is bad at FNA — as others seem to be pointing out. For starters, the region has several things going for it, including:
- Robust industry sales
- A strong product lineup
- Continued discipline in matching production to demand
- A lean cost structure
And we expect that as soon as all the preparation for the all-new F-150 come to an end, and the highly-innovative aluminum-bodied truck finally comes to market, the automaker will reap the rewards of its investments.