Ford falling despite better than expected earnings

F is for falling

Ford’s quarterly profit topped Wall Street expectations due to higher North American vehicle sales and prices consumers paid globally for cars such as the Focus and Fiesta, but shares slid after the company adjusted it full-year sales forecast. Ford, the only U.S. automaker that did not accept a government bailout in 2009, has posted a net profit for eight straight quarters. It racked up net losses of $30 billion from 2006 through 2008 when it cut jobs, sold unprofitable brands and reshaped a lineup laden with large SUVs and pickup trucks.

In the most recent quarter, Ford raised prices for Fiesta and Explorer sport-utility vehicles to offset some of the $4 billion in higher costs that Ford expects this year, including manufacturing spending. North America was the only region where Ford's profit improved, but pricing rose in every region, helping to offset higher commodity costs. Ford's net income in the second quarter fell to $2.4 billion, or $0.59 per share, from $2.6 billion or $0.61 per share. Excluding one-time items, Ford's quarterly profit of $0.65 per share was $0.05 better than what analysts on average had expected. Revenue rose 13% to $35.5 billion, exceeding the $31.6-billion consensus estimate.

However, Ford now expects U.S. sales for the full year at the bottom end of its previous forecast of 13.0-13.5 million vehicles. Earlier in the year, Ford had expected the higher end of the range. The shift in outlook echoed comments previously made by rival General Motors (GM) and comes after disappointing U.S. industry sales in May and June. Smaller rival Chrysler (FIA) also reported on Tuesday, posting a wider second-quarter net loss after the U.S. automaker repaid $7.6 billion in debt stemming from its 2009 federal bailout. Separately, Ford is scheduled to begin talks with the United Auto Workers union for a new labor deal to close a gap in labor costs with rivals.

Ford Motor (F : NYSE : US$12.94), Net Change: -0.23, % Change: -1.75%, Volume: 108,664,687

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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