Ford Motor Co posted a lower third-quarter profit after misjudging the threat of higher commodity prices and sustaining losses in its European and Asian operations.
The No. 2 U.S. automaker also offered a full-year forecast that suggested its operating margins would fall in the current quarter.
Ford shares were down 3.2 percent at $12.03 in morning trading on the New York Stock Exchange. The broad S&P 500 Index was up 0.9 percent.
Investors and analysts had been looking to the earnings report as a turning point where the automaker could detail plans to pay its first dividend since it slid into crisis in 2006. Ford has posted profits for 10 straight quarters.
But Chief Financial Officer Lewis Booth told reporters Ford would not address the timing of a dividend on Wednesday. He said growth in North America remained on a slow upward trend.
We've been saying for the last several quarters, we never expected to see a classic V-shaped recovery, Booth said.
Revenue rose 14 percent to $33.1 billion. But net income slipped to $1.65 billion, or 41 cents per share, down from $1.69 billion or 43 cents per share a year earlier.
Excluding one-time items, Ford earned 46 cents per share. On average, analysts had forecast 44 cents, according to Thomson Reuters I/B/E/S.
J.P. Morgan analyst Himanshu Patel called the third-quarter result so-so in a note for clients and said that the automaker's forecast for a lower fourth-quarter margin amounted to a weak forecast.
Ford said it expected to see a full-year automotive operating margin of 5.7 percent, down from 6.5 percent through the first three quarters. Last year, Ford's margin was 6.1 percent and it had previously forecast that it would match or beat that level.
Jefferies analyst Peter Nesvold said the lack of any new detail on Ford's plans to return to paying dividends could weigh on its stock. No incremental news on the dividend front, which we think will disappoint the market, he said in a note for clients.
LOSSES IN EUROPE, ASIA
For the third quarter, Ford benefited from stronger output in North America after U.S. auto sales steadied over the summer and avoided the renewed slump some analysts had feared.
That contributed to a pre-tax profit of $1.55 billion in North America.
But Ford took an operating loss of $306 million in Europe, compared with a loss of $196 million a year ago. In Asia and Africa, Ford reported a pretax operating loss of $43 million compared with a profit of $30 million a year ago.
In Europe, it's more problematic, Ford's Booth said. We could be in a period of very slow growth as the sovereign debt crisis gets resolved and we see the fiscal austerity programs working their way through the economies.
Ford lowered its automotive debt by $1.3 billion in the quarter, to $12.7 billion. That will save about $1 billion in interest payments in 2011 compared with 2010 because of its debt-reduction efforts.
The third quarter included a noncash charge of about $350 million to write down the value of hedges the company had taken out to offset the risk of rising raw material costs. However, those costs fell sharply in late September as concerns about weaker global growth mounted.
After last week's labor agreement between Ford and the United Auto Workers union on a new four-year contract, Fitch Ratings and Standard and Poor's both raised the company's credit rating to within one notch of investment grade.
Moody's Investors Service has not changed its rating on Ford, which is currently two notches below investment grade. But earlier this month Moody's said it was considering an upgrade.
Ford was last at investment grade in 2005.
Costs related to the contract ratification by Ford's 41,000 unionized U.S. factory workers were not reflected in the third-quarter results. Those costs will be reflected in fourth-quarter results, Booth said.
Last week, Booth said Ford could restart a dividend before it regains an investment-grade credit rating, but he did not discuss the timing of such a move.
We want to return to paying a dividend as soon as we think our balance sheet will stand it, and when we're ready to talk about it we will, he said on Wednesday.
(Reporting by Bernie Woodall and Ben Klayman, writing by Kevin Krolicki; editing by John Wallace and Matthew Lewis)