Ford's net income falls on truck switchover

A product switchover that reduced supplies of key new vehicles reduced first-quarter net income at Ford, despite reduced losses in both its European and South American operations for the quarter.

After-tax net income declined 19 per cent to $924m against the same quarter last year because of the changeover in both the F150 pick-up truck and the Edge sports-utility vehicle. The company has redesigned the F150, North America's best-selling vehicle for more than three decades, with a lightweight aluminium body. Most analysts believe F-series pick-up trucks alone account for well over half Ford's net income.

Revenue declined 5.6 per cent to $33.9bn.

While some decline had been expected, net earnings per share - which declined 1 cent to 23 cents - missed analysts' consensus estimate of 26 cents. The shares fell 1.57 per cent in premarket trading to $15.65.

Nevertheless, the company reaffirmed its guidance for full-year pre-tax profits of between $8.5bn and $9.5bn, increasing its forecasts for profits and margins in North America and cutting estimates for South America.

Mark Fields, chief executive, said the first quarter had been a "good start" to a year in which the company's results would grow "progressively stronger" as new product launches started to pay off.

The company has been progressively over the past nine years seeking to harmonise its global product range under its "One Ford" initiative.

"We are reconfirming that 2015 will be a breakthrough year for Ford as we continue accelerating our One Ford plan, delivering product excellence and driving innovation in every part of the business in a way that benefits all of our stakeholders," Mr Fields said.

To introduce the new F150, Ford had to halt production for a month last autumn at its Dearborn truck plant in Michigan. It undertook the same process early this year at the other assembly plant for the key product, in Kansas City, Missouri.

While the company gives no breakdown of profit share by vehicle, the shutdowns - and the resulting shortages of vehicles - are bound to have been a significant factor in the North American profit and revenue declines. First-quarter pre-tax income from continuing operations in North America declined 10.7 per cent to $1.34bn, on revenue down 2 per cent to $20bn.

In South America, meanwhile, pre-tax losses moderated to $189m, from $510m a year ago, on revenue down 21 per cent to $1.5bn. The company said introduction of One Ford profits had helped its market share but that overall volumes had declined.

In Europe, pre-tax losses also moderated, to $185m from $194m, on revenue down 11.5 per cent to $6.9bn. The strong US dollar had caused the revenue decline, the company said.

In Asia-Pacific, pre-tax profits more than halved - to $103m, from $291m - on revenue down 11.5 per cent to $2.3bn.

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