Ford Motor Company (NYSE:F) on Tuesday said falling European and South American sales hurt its first-quarter profit, while U.S. sales dipped due to a drop in supply of the immensely popular F-150 pickup truck as the company converted manufacturing facilities to change truck bodies from steel to aluminum.
Ford Motor reported net income in the three months ended March 31 of $924 million, down 6.6 percent from the same quarter last year. Earnings per share fell to 23 cents from 25 cents. Revenue declined to $31.8 billion from $33.9 billion in the year-ago period.
Analysts polled by Thomson Reuters had expected Ford Motor to report 16 percent higher net income for the first three months of the year compared to the year-ago period, to $1.15 billion. Earnings per share had been expected to increase from 25 cents to 27 cents. Revenue was forecast to be almost flat, edging up from $33.90 billion to $33.92 billion.
Despite the poor performance, company CEO Mark Shields said in a statement that he’s “re-confirming that 2015 will be breakthrough year.” Ford says its estimated pretax profits will rise this year to between $8.5 billion and $9 billion, up from $6.3 billion in 2014.
“After the transition year of 2014, Ford was looking for 2015 to be the breakthrough year, but the turn has not yet occurred," Michelle Krebs, senior analyst at AutoTrader.com, said in an email. "The first quarter continued to be a struggle. In the U.S., Ford's first-quarter sales increase was below that of the overall market, causing market share to slip again.”
Global revenue dropped, led by a $900 million retreat in Europe, to $6.9 billion. The January-March period has been a particularly challenging quarter for companies that convert revenue from foreign currencies to the U.S. dollar. That's because the greenback has gained about 14 percent against the world's major currencies in the first three months of the year, Bank of America Merrill Lynch said. That impact was reflected in Ford's global numbers. While Ford sold more cars in Europe and the Asia-Pacific region than it did in the first quarter of last year, the strong dollar meant that the company actually booked lower revenue from those increased sales.
The company’s Kansas City plant, one of two where the new aluminum-body F-150 is made, was back into production in March after a monthslong factory upgrade. That factory upgrade caused the supply of the country’s best-selling vehicle to drop. However, output of the popular vehicle will be back to normal by June, which is expected to lift Ford sales.
The upcoming 2016 Ford Fusion sedan, 2016 Ford Explorer SUV and 2016 Escape compact crossover, should lift sales later this year.
Demand for Ford’s smaller sedans and hybrids have been hit by low gasoline prices, which tend to lure American consumers to bigger gas guzzlers. Last week Ford announced it was laying off 700 workers at its Wayne, Michigan, assembly plant where the Ford Focus and Ford C-Max are made.