Ford CFO accounts for the miss on earnings
Ford Motor Company CFO Bob Shanks estimates how the potential trade war may affect the company’s sales and how international auto consolidation may take place in the future.
Ford reported weaker second-quarter earnings than expected Wednesday, as higher commodity expenses and a truck production delay weighed on its bottom line.
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The automaker also cut its earnings outlook for the full year after a “challenging quarter” in Asia Pacific and Europe. Ford now expects to book a 2018 profit of $1.30 to $1.50 a share, down from a range of $1.45 to $1.70.
Ford and its domestic rivals, General Motors and Fiat Chrysler Automobiles, each cited U.S. tariffs on steel and aluminum as a headwind in the most recent quarter. Like Ford, GM and Fiat Chrysler lowered their forecasts for full-year earnings, due in part to an increase in commodity prices.
During an interview on FOX Business’ “After the Bell,” Ford Chief Financial Officer Shanks said steel and aluminum tariffs created $150 million in headwinds during the period. Commodity costs increased by a total of about $300 million compared to the same quarter a year earlier, according to The Wall Street Journal.
Ford reported net income of $1.1 billion, a 48% drop year-over-year. On an adjusted basis, the company reported per-share earnings of 27 cents, falling short of Wall Street’s expectations for 31 cents. Revenue was down 2% at $38.9 billion. Analysts had expected $35.8 billion in revenue.
In addition to higher commodity costs, Ford’s earnings came under pressure from China, where the automaker swung to an operating loss. A temporary shutdown of F-Series production also weighed on the quarterly financial results. In May, Ford stopped building most pickup trucks for about a week after a key supplier’s manufacturing facility suffered a large fire.
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The Dearborn, Michigan-based company said it plans on implementing a corporate restructuring that may lead to $11 billion in charges over the next three to five years. Under the plan, Ford will redirect capital to businesses with the highest returns, such as trucks.
Ford previously announced it will cut $25.5 billion in costs by 2022.
Shares fell 3.6% in after-hours trading. GM dropped 4.6% following its earnings report, while Fiat Chrysler tumbled 11.8%.
