North American sales totaled $23.7 billion and pretax profit came to $2.7 billion, an amount Ford said is a third-quarter record.
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Earnings easily outpaced the $835 million reported in the same quarter a year ago, when sales and profits in North America felt the short-term impact of an aggressive year of product launches. The automaker posted adjusted diluted earnings per share (EPS) of $0.48 on revenues of $38.1 billion. Globally, per Ford, market share is also up in South America and Europe. Because of lower fuel prices and shifting preference of consumers from smaller utilities, small and medium sized cars are expected to lose market share. The stock has a consensus target price of $17.57, which has an upside potential of 18.34% against the current trading price.
On average, 18 analysts polled by Thomson Reuters expected the company to report profit per share of $0.47 for the quarter. After two-straight quarters with no special items, Ford incurred one special item in the third quarter: a gain of $166 million after an aluminum casting supplier in which it invested issued an IPO.
But thanks to the USA recovery and the anticipated performance of the F-150, along with other trucks and SUVs that Ford sells, Shanks said that Ford would raise its guidance to the higher end of its predicted 8.5-9.5% range for operating margin.
Moreover, General Motors Company (NYSE:GM) also reported robust earnings for its third-quarter with the forecast that it will achieve sales of 250,000 vehicles, up 10.2%.
“Tax rates can go all over the place”, Shanks said today, explaining to reporters why Ford paid less in taxes than it thought but more than analysts had forecast.
This was the first quarter that Ford had full stocks of the F-150.
Shanks said that lackluster earnings per share is “entirely due to a tax rate difference”. The top executive added that a few of the most promising emerging markets for the company – such as Brazil – have turned into money losing markets but the company remained optimistic about China, the world’s largest auto market, predicting a record tally for the remaining months for its Asia-Pacific business. “There are aspects of the agreement that we’ll book in the fourth quarter…but that’s normal”. What seems to have been lost in the midst of the news of the shortcoming, however, is that Ford was still wildly profitable in the third quarter in spite of uncertainty in each of the overseas markets where it operates. The company predicts the rest of the year will prove out with pre-tax profit besting 2014.
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A year ago, Fields asked investors to be patient while Ford made big investments for the future, promising that those investments would begin to pay off in the second half of 2015.
