Ford Motor Co.
) posted an impressive 50% rise in earnings per share to 45 cents
in the second quarter of 2013 from 30 cents in the same quarter
of 2012 (all excluding special items). With this, the company has
beaten the Zacks Consensus Estimate of 37 cents as we expected
due to the combination of the stock's Zacks Rank #2 (Buy) and
+2.70% ESP (Read:
Zacks Earnings ESP: A Better Method
Pre-tax income rose 39.7% to $2.6 billion from $1.8 billion in
the second quarter of 2012. Net income surged 52.4% to $1.8
billion from $1.2 billion a year ago.
The Detroit automaker's business in all the geographic regions
improved during the quarter. We have seen the company's North
American and Asia-Pacific businesses to improve in the prior
quarters. But this time, Ford's European and South American
businesses showed marked improvement as well. Thanks to its One
Ford plan that seems to bear fruits.
Revenues in the quarter grew 14.4% to $38.1 billion, exceeding
the Zacks Consensus Estimate of $35.4 billion. The improvement
was attributable to increased wholesale volumes in automotive
business and higher market share in all the regions.
In the first half of the year, Ford's total U.S. market share was
16.2% versus 15.4% in the first half of 2012; European market
share was 7.9% versus and 8.1% in the same period a year ago; and
China market share was 3.9%, up from 3.2% in 2012. Industry
volumes in the period were 15.6 million units in the U.S., 13.5
million units in Europe and 21.4 million units in China.
Revenues in the segment grew 16.0% to $36.0 billion on a 16.0%
rise in wholesale volumes to 1.7 million units, reflecting
improved market share and lower dealer stock reductions, as well
as net pricing gains in all the regions, except Europe, offset
partially by unfavorable exchange in all regions. Pre-tax profit
soared 52.2% to $2.1 billion from $1.4 billion a year ago due to
higher profits in all the regions.
, revenues went up 13.7% to $22.4 billion on a 14.5% rise in
wholesale volumes to 823 thousand units. The company benefited
from higher industry sales and healthy full-size pickup sales in
the region, market share gains in East and West Coast markets,
continued discipline in matching production to real demand and a
lean cost structure.
Pre-tax profit improved 15.9% to $2.3 billion. This is the fifth
time in the past six quarters that the North American business
achieved a pre-tax profit of more than $2 billion. Ford continues
to expect higher pre-tax profit compared with 2012 and operating
margin of 10% in the region.
, revenues escalated 30.4% to $3.0 billion due to higher volumes
from new products and net pricing gains, offset partially by
unfavorable exchange. Wholesale volumes rose 23.5% to 147
thousand units, reflecting favorable changes in dealer stocks and
higher industry sales.
The South American business recovered from the exchange-driven
loss in the first quarter. Pre-tax profit jumped to $151 million
from a meager $5 million in the second quarter of 2012. Ford
continues to expect breakeven results in the region due to a
challenging economic environment.
, revenues inched up 7.0% to $7.6 billion as wholesale volumes
increased 8.9% to 391 thousand units. The increase in volumes was
attributable to non-repeat of dealer stock reductions incurred in
2012 and higher market share, partially offset by lower industry
The region had a narrower pre-tax loss of $348 million compared
with $404 million a year ago. The improvement in volumes was
caused by favorable volume and mix, offset partially by higher
structural costs, mainly accelerated depreciation and a
nonrecurring write-off related to planned closure of facilities.
For full year 2013, Ford expects lower pre-tax loss of about $1.8
billion in the region, compared with the prior guidance of a loss
of $2 billion.
Asia-Pacific & Africa
, revenues grew 30.4% to $3.0 billion on an impressive 26.8% rise
in wholesale volumes to 317 thousand units. The increased volumes
reflected a gain in market share to 3.6%, driven mainly by China.
In China, Ford's market share improved 1.5 percentage points to a
quarterly record of 4.3%, fueled by strong sales of the new
Focus, Kuga and EcoSport SUV.
The region reported an operating profit of $177.0 million in
sharp contrast to a loss of $66 million - a clear-cut impact of
the company's One Ford plan. It is the company's best-ever
quarterly pre-tax profit. For full year 2013, Ford expects Asia
Pacific Africa to be profitable given its strong first half
performance and momentum in the region.
- consisting primarily of interest and financing-related costs -
revealed a broader pre-tax loss of $205 million compared with
$163 million a year ago. The loss was attributable to net
interest expense, offset partially by a favorable fair market
value adjustment on the company's investment in Mazda Motor.
Revenues in the segment rose 10.5% to $2.1 billion. Ford Credit
reported a 3.7% rise in pre-tax profit to $454 million due to
higher receivables and financing margin, offset partially by
lower credit loss reserve reductions.
continues to expect pre-tax profit to be about equal to 2012 and
to pay distributions to its parent of about $200 million. It also
anticipates year-end managed receivables between $97 billion and
$102 billion, within the prior range of $95 billion to $105
Ford had cash and marketable securities of $25.7 billion as of
Jun 30, 2013, an improvement of nearly $2.0 billion from $23.8
billion as of Jun 30, 2012. However, Automotive debt rose $1.6
billion to $15.8 billion as of Jun 30, 2013 from $14.2 billion as
of Jun 30, 2012.
In the first half of 2013, the company's cash flow from
continuing operations increased nearly 63.0% to $4.4 billion from
$2.7 million a year ago. Operating-related cash flows more than
doubled to $4.0 billion from $1.7 billion a year ago. Capital
expenditures increased nearly 35.0% to $3.1 billion from $2.3
billion in the same period a year ago.
In the year, Ford expects industry volume (including medium and
heavy trucks) of 15.5 million units-16.0 million units in the
U.S.; 13.0 million units-13.5 million units in the 19 European
markets; and 20.5 million-21.5 million units in China.
The company expects its 2013 market share in the U.S. to be
higher than 2012 (15.2%), Europe to be almost the same as in 2012
(7.9%), and China to be higher than 2012 (3.2%).
Ford provided a better outlook about its margins. During the
year, Ford anticipates total company pre-tax profit to be the
same or higher than 2012 ($8.0 billion) compared with the prior
guidance of being equal to 2012. It expects operating margin to
be equal to 2012 (5.3%) compared with the prior guidance to be
equal or lower than 2012.
Moreover, the company expects operating related cash flows to be
substantially higher than 2012 ($3.4 billion) compared with the
prior projection of being higher than the prior year.
In separate news, Ford announced that the company raised its
work force requirement to 3,000 from 2,200 people announced
previously. The company plans to hire 800 more engineers,
computer specialists and other salaried workers in the U.S.
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Ford Motor lost 13,000 salaried workers in the U.S. between 2006
and 2009. Its human resources chief, Felicia Fields, revealed
that many of them returned to the company while some are hired
) and other technology companies.
Ford's cross-town rival,
General Motors Company
), will release its second quarter results tomorrow.