Ford profit beats forecasts on record North America margins

Tue Oct 30, 2012 9:49am EDT
 
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By Deepa Seetharaman and Ben Klayman

DETROIT (Reuters) - Ford Motor Co (F.N: Quote) on Tuesday posted a third-quarter profit that trounced Wall Street forecasts due to higher vehicle prices and record-high profit margins of 12 percent in North America.

The No. 2 U.S. automaker posted an operating profit of $2.2 billion, or 40 cents per share, beating the average estimate of 30 cents per share, according to Thomson Reuters I/B/E/S.

Worldwide, Ford earned $800 million more in pricing than it did last year. Half of the pricing increase came from North America, where Ford earned more than $2 billion and posted margins over 10 percent for the third quarter in a row.

"To me, the story isn't just the results in the quarter, but the consistency of the results," Chief Financial Officer Bob Shanks told reporters.

Ford's strength in North America has offset a sharp downturn in Europe, where Ford lost $468 million in the quarter, and its lagging position in growth markets in Asia, especially China.

Ford expects to U.S. auto sales will be 14.7 million this year. In the third quarter, Ford earned about $2.3 billion in North America. Contribution costs, which includes the cost of commodity hedging, fell by $500 million in the market.

"Twelve percent segment margins is just insane," said Jefferies analyst Peter Nesvold, who has a "buy" rating on Ford. He added: "It is hard to believe that any OEM can sustain 12 percent segment margins over the long term."

Ford's third quarter revenue fell 3 percent to $32.1 billion, better than the $30.9 billion expected by analysts. Net income in the quarter was about $1.6 billion, or 41 cents a share, on par with results from last year.   Continued...

 
The Ford logo is seen at Ford car plant in Craiova, 230km (143 miles) west of Bucharest, October 29, 2012. REUTERS/Bogdan Cristel