Ford revealed today that their second quarter net income rose by 3.7 percent year over year to $2 billion, and while this is good news for investors and shareholders, its actual pre-tax profit dropped 16 percent to $2.51 billion. Ford says that lower pre-tax profits are the result of the higher cost of steel for manufacturing, foreign currency exchange rate issues, and other challenges facing domestic automakers.
Their Q2 net income was buoyed by a lower tax rate of just 10%, compared to 30% anticipated by analysts. Ford reported higher quarterly net income of $0.51 per share, up slightly from $0.49 per share year over year. Excluding one-time items, analysts were looking for earnings of $.43, and Ford handily topped that figure, delivering $0.56 for the quarter.
The company also notes that the scrapping of the South American production plan for the Focus sedan – thanks to President Trump…thanks a lot, Donald – also cost the company a cool quarter of a billion dollars. Keep in mind that Ford now plans to move production of the Ford Focus to China, not back to the United States.
The Blue Oval admitted to shareholders that the F-Series and commercial autos carried the ball in profits and, essentially, the North American operation carried the company as a whole. In the United States, the F-Series truck experienced its best Q2 sales performance since 2001, delivering a 7% gain over last year. Ford’s F-Series has been a consistent winner in the truck segment with sales of over 800,000 units in the United States in 2016, it once again won the title of best-selling truck in America for 40 years straight. It looks like the consumer love affair with the F-150 has not abated in 2017. In the passenger car segment, Lincoln posted record June sales in China, up 84%, while the luxury brand also delivered its best US sales performance in a decade with over 29,000 sales in Q2.
What’s interesting is that the company’s CEO, Jim Hackett, didn’t really have a lot to say about what they’re doing on the alternative fuel and hybrid lines this quarter. While we like the F-150 as much as the next reviewer, Ford needs to ensure they don’t get left behind given the world we live in – but what do we know. Ford forecasts 2017 annual adjusted earnings per share of between $1.65 and $1.85 per share.