Ford Motor Co. ( F ) posted an increase of
4.1% in earnings to $1.6 billion and 5.1% in earnings per share to
41 cents in the first quarter of 2013, beating the Zacks Consensus
Estimate by 3 cents. Revenues improved 10.5% to $35.8 billion,
exceeding the Zacks Consensus Estimate of $32.8 billion.DENSO CORP (DNZOY): Get Free ReportFORD MOTOR CO (F): Free Stock Analysis ReportGENERAL MOTORS (GM): Free Stock Analysis ReportVISTEON CORP (VC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
The improvement in revenues and earnings was mainly attributable
to Ford's strong performance in North America and Asia Pacific
Africa. The company's results were disappointing in South America
due to unfavorable exchange rate as well as in Europe due to the
Revenues in the segment grew 11.1% to $33.9 billion on a 10.2%
rise in wholesale volumes to 1.5 million units. The increase was
attributable to market share gains in both North America and Asia
Pacific Africa. However, pre-tax profit fell 10.6% to $1.6 billion
(5.2% of sales) from $1.8 billion (6.4%) due to poor performance in
Europe and South America.
In North America, revenues increased 19.9% to $22.3 billion as
wholesale volumes went up 16.9% to 761 thousand. Pre-tax operating
profit rose 14.5% to the record level of $2.4 billion (11.0% of
sales) since 2000 when the company began reflecting the region as a
separate business unit. The improvement was attributable to
favorable market factors, offset partially by higher costs
associated with the company's investment in new products and
growth, as well as higher pension and OPEB expense.
In South America, revenues dipped 4.2% to $2.3 billion as
wholesale volumes fell 4.2% to 113 thousand. The operating region
saw a pre-tax loss of $218 million in sharp contrast to a profit of
$54 million in the first quarter of 2012. The decrease reflected
unfavorable exchange rate, most related to Venezuela, including the
impact of the devaluation of the Bolivar as well as currency
weakening in Argentina.
In Europe, revenues shrank 6.9% to $6.7 billion on an 8.3% fall in
wholesale volumes to 341 thousand. The region had a broader
operating loss of $462 million compared with $149 million in the
prior year. The drastic fall was attributable to higher structural
costs and higher pension expenses due to lower discount rates as
well as unfavorable market factors and exchange rates.
In Asia-Pacific & Africa, revenues escalated 13.0% to $2.6
billion on an impressive 30.0% rise in wholesale volumes to 282
thousand. The operating region reported a pre-tax operating profit
of $6.0 million (0.2% of sales) compared with a loss of $95.0
million (4.2%) in the year-earlier quarter. The improvement was
mainly attributable to favorable market factors, increased
royalties and subsidiary profits, partly offset by the impact of
the company's investments for future growth in the region.
Ford's Other Automotive - consisting primarily of interest and
financing-related costs - saw a broader pre-tax loss of $125
million compared with $106 million in the year-ago quarter. The
higher loss reflected net interest expense, offset partially by a
favorable fair market value adjustment on the company's equity
investment in Japan's Mazda Motor.
Ford's Financial Services segment generated revenues of $1.9
billion, which was flat compared with the year-ago level. The
segment reported a 10.3% rise in pre-tax operating profits to $503
million from $456 million in the previous year-quarter. Ford Credit
registered a 12.2% rise in pre-tax operating profits to $507
million from $452 million a year ago due to higher receivables and
favorable residual performance, offset partially by lower credit
loss reserve reductions.
Ford had cash and marketable securities of $24.2 billion as of Mar
31, 2013, up from $23.1 billion as of Mar 31, 2012. Automotive
gross cash rose to $24.2 billion as of Mar 31, 2013 from $23.0
billion as of Mar 31, 2012. Automotive debt increased to $16.0
billion as of Mar 31, 2013 from $13.7 billion as of Mar 31,
In the quarter, the company's Automotive operating-related cash
flow deteriorated to $700 million from $900 million in the first
quarter of 2012. Meanwhile, capital expenditures enhanced to $1.5
billion from $1.1 billion in the prior-year quarter.
For full year 2013, Ford expects industry volume (including medium
and heavy trucks) of 15.0 million units-16.0 million units in the
U.S. compared with 14.8 million units in 2012; 13.0 million
units-14.0 million units in the 19 European markets covered by the
automaker compared with 14.0 million units in 2012; and 19.5
million-21.5 million units in China compared with 19.0 million
units in 2012.
The company expects its 2013 market share in the U.S. to be higher
than 2012, Europe to be almost the same as in 2012, and China to be
higher than 2012. Its market share in 2012 was 15.2% in the U.S.,
7.9% in Europe and 3.2% in China.
During the year, Ford anticipates total company pre-tax operating
profit to be the same as in 2012. Ford Credit is also expected to
report flat pre-tax operating profit compared with 2012.
We appreciate Ford's product plans and debt reduction strategy.
However, we are concerned about the economic weakness in Europe as
well as higher structural costs.
As a result, the company currently retains a Zacks Rank #3 on its
stock, which translates to a short-term (1 to 3 months) rating of
Hold. The company's cross-town rival General Motors
Company ( GM
) will release its first quarter results on May 2.
Some other stocks that are performing well in the industry where
Ford operates include Visteon Corp. ( VC ) and Denso
Corp. ( DNZOY ). They carry a
Zacks Rank #1 (Strong Buy).