Earnings Preview: Ford to report 3Q results
DEARBORN, Mich. (AP) — Ford Motor Co. reports its third-quarter earnings Tuesday, less than a week after the company announced it would close three plants in Europe to stem billion-dollar losses in that region.
WHAT TO WATCH FOR: Ford said last week that it expects third-quarter pretax earnings to beat the second quarter, when it earned $1.8 billion.
Europe is a drag, and will remain so until at least 2014, when the company plans to close an underused plant in Belgium. Ford expects to lose more than $1.5 billion in Europe this year, up from its earlier forecast of $1 billion. It believes it will lose another $1.5 billion in the region next year as it speeds up a restructuring. The plant closures will affect more than 6,200 employees.
Despite that overhang — and, most likely, revenues that are lower than they were a year earlier — Ford will also have some bright spots in the July-September period. In a recent note to investors, Morgan Stanley auto analyst Adam Jonas predicted a 30 percent increase in Ford's third-quarter sales in its Asia Pacific region, largely due to the success of the new Focus small car in China. Jonas forecasts a 7 percent gain in South America, where government stimulus money has been fueling sales, and a 3 percent increase in North America.
Ford's U.S. sales slowed a bit in the third quarter. That was partly due to the strong comeback of Japanese automakers after last year's earthquake and partly because two of Ford's most popular models — the Escape and Fusion — were dwindling down as new versions of those vehicles hit the market. The new Escape had some quality issues, with three recalls in its first few weeks on the market. But it was still a strong seller, with U.S. sales up 15 percent in September.
Ford also is expected to give an update on its offer to buy out the pensions of around 90,000 U.S. salaried retirees. The company announced the offer in the spring.
WHY IT MATTERS: Ford's shares, which were near $13 last spring, spent all of the third quarter below $10 as investors fretted about Europe. Ford's third-quarter results give the company a chance to remind investors that North America was as unhealthy as Europe just a few years ago but is now enjoying near-record profits. The rebound is thanks to a restructuring that cut plants and employees, and revamped products. Ford says its European restructuring will follow that blueprint, but it's unclear if investors will want to wait out the multi-year slog back to profitability.
WHAT'S EXPECTED: Analysts polled by FactSet expect the company to earn 29 cents per share on revenue of $31.5 billion.
LAST YEAR'S QUARTER: Ford earned 41 cents per share on revenue of $33.1 billion.