Dearborn, Michigan – Ford’s third quarter earnings fell by more than half to $1.2 billion from a year ago ($2.6 billion) as the company took on extra costs to launch its new F-150 pickup and other vehicles. Lower sales worldwide also hurt both revenues and profits.
As with General Motors, which also reported third-quarter profits this week, Ford’s results were hampered by weakness in Europe and South America and slowdowns in Asia. Unlike GM, which did well, Ford’s sales suffered in North America, primarily because it was cutting production for its most popular vehicle, the F-150, just as the pickup market heated up. GM and Chrysler’s Ram line have gained steam while Ford was retooling to launch the new aluminum-bodied truck, a vehicle that should be in dealerships late this year or in early 2015.
“During the third quarter, we continued to introduce an unprecedented number of new vehicles and invest heavily in the new products and technologies that will deliver strong profitable growth beginning next year,” said Mark Fields, president and CEO. “We also addressed business challenges head-on using our proven One Ford plan. Everyone at Ford remains focused on accelerating our pace of progress, while delivering product excellence and innovation in every part of our business.”
Ford’s automotive operating-related cash flow was negative $700 million in the third quarter. Unfavorable changes in working capital, including the effects of the five weeks of downtime in the quarter at the Dearborn Truck Plant as the company transitions to the all-new F-150, as well as supplier parts shortages, caused the decline. In the fourth quarter, working capital changes are expected to be positive. The company ended the third quarter with automotive gross cash of $22.8 billion, exceeding debt by $7.9 billion, with automotive liquidity of $33.6 billion.
In 2015, Ford expects to realize the benefits of global product investments and growth strategies, and will launch 16 new vehicles. The company expects its pre-tax profit, excluding special items, to be significantly higher — in the $8.5 billion to $9.5 billion range — with all five automotive regions improving on 2014 results.
“We are committed to offering our customers the freshest lineup of world-class vehicles in the industry,” said Fields. “Our One Ford plan remains fundamental to our performance going forward, and our investments this year will fuel profitable growth in 2015.”
Source: Ford Motor Co.