Ford’s net income slipped by 34 percent, down to $835 million in the third quarter, with the costs of launching its new pickup truck, the F-150, dampening profits.
Revenue for the automotive giant was down by 2.5 percent to $34.9 billion, better than what most Wall Street analysts had forecast (of circa $33.7 billion).
The new aluminum-sided F-150 is going to be much lighter and more efficient when it goes on sale later this year. It is 700 pounds lighter than the previous model, thanks to its aluminum build.
The company has been actively working on replacing equipment. There was five weeks of downtime in the quarter at the Dearborn Truck Plant, which is what caused $700 million in negative operating cash flow. In the fourth quarter, working capital changes are expected to be positive.
The company ended the third quarter with Automotive gross cash of $22.8 billion, exceeding debt by $7.9 billion, with Automotive liquidity of $33.6 billion.
It is Ford’s first quarter with negative cash flow in nearly four years. Sales in North America were down by 8 percent, with the company cutting back on truck sales to preserve inventories as it prepares for the new truck. Pretax profits in the area declined by 39 percent to $1.4 billion.
According to a statement by Ford:
“Wholesale volume and company revenue declined year-over-year by 3 percent and 2 percent, respectively; market share higher in Europe and record third quarter market share in Asia Pacific; record market share in China.”
Mark Fields, president and CEO, said:
“During the third quarter, we continued to introduce an unprecedented number of new vehicles and invest heavily in the new products and technologies that will deliver strong profitable growth beginning next year,”
“We also addressed business challenges head-on using our proven One Ford plan. Everyone at Ford remains focused on accelerating our pace of progress, while delivering product excellence and innovation in every part of our business.”
Ford’s new F-150 pickup truck.
The figures were still ahead of Wall Street’s expectations for the quarter. Ford earned 21 cents per share, down from 31 cents year-over-year. Analysts has forecast earnings of 19 cents, according to a FactSet poll.
Ford has been warning investors that the year would be a difficult one. The company launched a record 23 vehicles, is building five new plants in Asia, and is about to launch the luxury Lincoln brand in China.
The company recently reduced its full-year pretax profit forecast to $6 billion, down from $8.6 billion in 2013.
Ford has seen lackluster sales in South America, with a loss of a loss of $170 million compared to a profit of $160 last year.