DEARBORN, Mich. – Europe may have lost its appetite for new cars, but buyers in America and China propelled Ford to a better-than-expected profit in the third quarter.
Ford Motor Co. earned $1.63 billion, down only slightly from a year earlier, despite lower worldwide sales and bigger European losses. It was the company’s best performance ever in the third quarter.
Ford said Tuesday its per-share net income was unchanged at 41 cents. Excluding one-time items, like severance payouts, Ford earned 40 cents per share, beating Wall Street’s forecast of 30 cents, according to FactSet.
Ford reported a $2.3 billion pretax profit in North America, its best performance since the company began reporting separate North American results 12 years ago. The region has been profitable for three years now, after a grueling restructuring that saw thousands of job cuts, plant closures and the accelerated development of new products like the Focus sedan. That restructuring is now Ford’s blueprint for Europe, which is expected to drag down results this year and next.
“We know what it takes to have a healthy business,” Chief Financial Officer Bob Shanks said.
Ford’s revenue fell 3 percent to $32.1 billion as vehicle sales dropped worldwide, but the company still exceeded Wall Street’s revenue forecast. That was due to North America, where revenue jumped 8 percent to $19.5 billion, helped by higher pricing and increased sales of more profitable trucks and SUVs like the Ford Explorer.
It was the third quarter in a row that the company has made more than $2 billion in North America and has reported an operating margin of 10 percent or more. Ford’s North American operating margin was 12 percent in the third quarter.
“To me the story isn’t just the results but the consistency of the results,” Shanks said. It’s also impressive because the third quarter is typically a slower period. Summer production shutdowns cut into profits, while fall launches of new cars can hurt sales of older cars still in showrooms.
Shanks said the 12-percent rate likely won’t be repeated in the fourth quarter, when automakers typically spend more on holiday ads. Ford also saw a gain from commodity hedging that might not be repeated.
Ford’s U.S. market share actually fell from a year earlier. Japanese automakers regained their footing after the 2011 earthquake, and Ford stopped selling the Ranger pickup and Crown Victoria sedan, which had strong sales last fall. Shanks said Ford is optimistic that its share will grow in the fourth quarter, as new versions of the Fusion sedan and Escape small SUV arrive at dealerships. But he said Ford won’t go back to its old habit of gaining share by heavily discounting its vehicles or dumping them into rental-car fleets.
North American sales were up 3 percent. But more importantly, Ford made more money on every vehicle it sold as customers paid more for features like inflatable seat belts. The company also spent less on incentives. Car buying site TrueCar.com said U.S. buyers paid an average of $32,115 for a new Ford in the third quarter, up more than $300 from the same time last year.