Ford Motor Co., the second-largest U.S. automaker, reported first-quarter profit that exceeded estimates as the Fusion sedan bolstered record results for its North American operations.
Ford reported net income of $1.61 billion in a statement distributed at its Dearborn, Michigan, headquarters. Excluding one-time items, the per-share profit was 41 cents, exceeding the 37-cent average estimate of 17 analysts surveyed by Bloomberg. The result compared with net income of $1.4 billion, or 35 cents a share, a year earlier.
The new Fusion, which has drawn comparisons to Aston Martin car styling, is part of Chief Executive Officer Alan Mulally’s efforts to fill out Ford’s lineup with more competitive cars to complement its pickups and sport-utility vehicles. Ford’s more complete showrooms drove a record $2.4 billion quarterly profit in North America, which countered slumping demand in Europe and losses in South America.
“Ford has the freshest product in the right segments,” Kevin Tynan, an auto analyst for Bloomberg Industries in Skillman, New Jersey, said in a telephone interview. “It’s entry-level, it’s move-up and then its crossovers, with Escape and Explorer.”
Ford introduced the mid-size Fusion late last year, reinforcing a car lineup already led by the Focus compact, the top-selling global nameplate, according to R.L. Polk & Co. First-quarter automotive revenue totaled $33.9 billion, from $30.5 billion a year earlier. Sales exceeded the $33.6 billion average estimate of 11 analysts.
Ford rose 1.6% to $13.57 at 8:27 a.m. New York time before the start of regular trading. The shares gained 3.2% this year through yesterday compared with an 11% increase for the Standard & Poor’s 500 Index.
The company also forecast it would build 800,000 vehicles in North America and 390,000 in Europe during the current quarter. That’s up 63,000 in North America and 21,000 in Europe from a year earlier. Automakers record revenue when vehicles are assembled and shipped to dealers.
“We expect a mostly neutral reception to 1Q results themselves and a slightly positive reception to the 2Q production guidance,” Ryan Brinkman, an analyst with JPMorgan Chase & Co. said in an e-mail.
Renewed demand for pickups also helped pace the biggest U.S. sales gain among top automakers in the quarter. Ford’s F- Series line has led the segment for 36 consecutive years.
Ford is leading Detroit’s best lineup of American cars in a generation. Ford, General Motors Co. and Chrysler Group LLC are turning sedans and small cars into areas of strength to counter a weakening yen that’s giving Toyota Motor Corp. and Honda Motor Co. an advantage.
The operating profit in North America topped Ford’s previous record of $2.3 billion in 2012’s third quarter. The region’s operating margin was 11%, ahead of the company’s full-year forecast of 10% in an industry where 5% is considered respectable.
A worsening economic slump in Europe stemming from that region’s debt crisis is holding Ford back. The automaker lost $462 million in that region during the first three months of the year. Ford reiterated its forecast that its full-year losses in Europe will widen to about $2 billion in 2013 from a $1.75 billion deficit a year earlier.
Venezuela’s devaluation in February and trade restrictions by Brazil and Argentina also are denting Ford’s results in South America. The company said it lost $218 million there in the first three months of the year, beating its forecast of about $300 million given in March.
Ford’s Asia Pacific Africa operations earned $6 million in the quarter after losing $95 million a year earlier. Ford is investing $4.9 billion in China, where it’s trying to catch up with market leaders GM and Volkswagen AG.
Ford is restructuring its European operations to try to end losses. The automaker plans to shutter three European factories by 2014, which is leading to disruptions across its plants as production is consolidated. Those closures will eventually save Ford $500 million a year, said Adam Jonas, an auto analyst at Morgan Stanley.
Ford has deferred by a year the introduction in Europe of the Mondeo, sold in the U.S. as the Fusion, because it’s now built at one of the plants due to be shut, at a cost of about $200 million, Jonas said. The company faces about $400 million of accelerated depreciation this year that will not recur once the three factories close, he said.
As Ford revamps in Europe, it’s also trying to crack the luxury market, one of the company’s biggest headaches. Sales for its Lincoln line plunged in January to the brand’s worst monthly showing in almost 32 years as production of the MKZ sedan was slowed for quality checks. Ford said supply would be back to normal this month.
Lincoln deliveries in the first quarter fell 24% from a year earlier, the most of any brand with at least 100 sales, to 15,899. Toyota’s Lexus ES sedan, with 16,801 deliveries, by itself outsold all of Lincoln in 2013’s first three months.
“It’s time to focus on the luxury car and utility segments that buyers move up into,” Tynan, the Bloomberg Industries analyst, said in a telephone interview. “That’s going to be important, longer term, to keep loyal customers in the fold.”