Ford reports slump in profits, lowers year-end guidance

2019-10-25 07:27

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CHICAGO, Oct. 24 (Xinhua) -- Earnings of Ford Motor Co. slumped in the third quarter of 2019, largely due to charges associated with its strategic revamp announced in January, the company said earlier this week.

Amid a 57-percent slide in third-quarter net profits tied to its global restructuring, the automaker said it is lowering its guidance for the year.

Ford expects higher warranty charges, higher-than-planned incentives and struggling sales in China to drag on profits through the end of the year, the company's officials said.

The Blue Oval expects to make between 6.5 billion and 7 billion U.S. dollars in 2019, which is lower than the 7 billion dollars in profits before taxes the automaker made in 2018.

"We're experiencing more headwinds than expected in the fourth quarter," Ford CEO Jim Hackett said. "Of course, we're disappointed in this."

According to the company's financial report, the automaker made a net income of 425 million dollars in the third quarter.

Adjusting for roughly 1.5 billion dollars in one-time charges associated with its global restructuring and the creation of a new joint venture in India, the automaker would have made 1.8 billion dollars last quarter.

Ford said it made 2 billion dollars in North America, up 3 percent from a year ago. The automaker reported an 8.6 percent operating margin in the region, down slightly compared to a year ago.

Ford lost 165 million in South America, lost 179 million in Europe, lost 27 million in the Middle East and Africa, lost 281 million in China, which accounts for the biggest part of financial loss.

Data show Ford's third-quarter vehicle sales in China fell 30 percent, as the automaker continued to lose ground in a prolonged sales decline in its second-biggest market.

The Michigan-based automaker delivered 131,060 vehicles in China in the third quarter, Ford said in a statement.

Ford's sales in China fell by 35.8 percent in the first quarter and 21.7 percent in the second quarter.

In the third quarter, sales of the automaker's mass-market Ford brand fell 37.7 percent, while its luxury division Lincoln saw sales drop by 24.1 percent. It delivered around 421,000 vehicles in the first nine months of the year.

The third quarter was expected to be Ford's worst of the year as part of a weaker second half compared to 2018.

Hackett announced a massive 11-billion-dollar restructuring plan earlier this year, boldly deciding to phase out all sedans to refocus on its popular trucks and SUVs.

The plan also frees up capital to ramp up its electric and autonomous vehicle programs. As part of the restructuring, Ford slashed about 10 percent of its white collar workforce, or about 7,000 employees, earlier this year.

Investors have been patiently waiting to see the results. Ford's shares hit an almost decade-long low in December 2018, closing at 7.63 dollars a share on Christmas Eve, and are still trading under 10 dollars a share, according to data compiled by FactSet.

The third-quarter report is the first since Moody's Investors Service downgraded Ford's credit rating to junk status in September.
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