Tag Archives: Ford North American

Ford's Pickups Drive Big Profits

By John Rosevear, The Motley Fool

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Ford’s F-150 and its heavy-duty siblings aren’t just America’s best-sellers; they may be Ford’s biggest profit generators. Photo credit: Ford Motor Co.

Ford posted a first-quarter profit of $1.6 billion on Wednesday, a good result that was better than Wall Street expected. That profit was driven by very strong earnings in the company’s North American division. Ford North America is hitting on all cylinders right now, as recent models like the Fusion and Escape are doing very well with buyers.

But as always with Ford, its F-Series pickups are a big part of the story.

Ford’s cars are better than ever, but its pickups might still be its most important products
In the U.S., Ford sells more of its F-Series pickups — the popular F-150 and its heavier-duty siblings — than any other vehicle. In fact, it’s the best-selling vehicle in America and has been for decades.

Lots of people will tell you that Ford builds a good truck. And while its No. 1 sales ranking occasionally benefits from rival General Motors‘ insistence on splitting its full-sized pickup sales between the Chevrolet and GMC brands, there’s no doubt that it’s an exceptionally popular and successful product.

What is somewhat less well known is that it’s a very profitable product as well. Some of that profit comes from sheer numbers: Ford sold 168,843 F-Series pickups in the U.S. in the first quarter of 2013, a 17.4% increase over the first quarter of last year. That’s almost as many sales as all of Ford’s popular SUVs managed — when added together.

But it’s also true that pickups in general have very good profit margins. Ford’s exact profit per pickup sold is a closely guarded secret. But there’s little doubt that it’s good: One leading Wall Street analyst said last year that the F-Series might represent as much as 90% of Ford’s global profit.

Ford made $2.4 billion in North America in the first quarter. (Ford’s total profit was lower because of losses and spending overseas, where Ford is still restructuring and expanding.) Clearly, a lot of those dollars came from pickup sales.

But here’s the interesting thing about Ford: As good as that North America profit number was — and it was Ford’s best in more than a decade — it could have been even higher.

Investing more of Ford’s profits for future growth
Ford’s North American profit was very strong, and its profit margin was also very good at 11%, a big number for a mass-market automaker. But some analysts had expected a slightly higher profit, and a slightly higher margin — in part because of Ford’s strong pickup sales.

Ford could have arranged to post a higher profit. But its costs were up in the quarter, because the company is plowing more of its money into developing new vehicles.

Ford CEO Alan Mulally is in the midst of a multiyear push to build more vehicles off shared

Source: FULL ARTICLE at DailyFinance

Ford's Q1 Earnings: An Early Preview

By John Rosevear, The Motley Fool

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What should we expect when Ford reports earnings later this month?

One thing seems a safe bet: Ford will post a solid profit. But how will it compare with last year’s? And how will the various challenges that Ford has been facing around the world affect the Blue Oval‘s bottom line?

The engine of Ford’s global profits
Ford’s North American unit is the “engine” of the company’s business, as CEO Alan Mulally often says. With many European nations facing deep recessions, an aggressive effort by Ford to invest for expansion in Asia, and now increasing signs of challenges to Ford’s bottom line in South America (more on that in a moment), it’ll be up to North America to post a strong performance to power Ford’s bottom line.

Fortunately, the signs have been pretty good on that front. Ford’s U.S. sales made steady gains during the quarter, up 22% in January, 9% in February, and 6% in March, even as the overall U.S. auto market showed signs of cooling off.

More importantly for Ford’s bottom line, full-sized pickup sales have been strong. Ford’s F-Series lineup had its best first-quarter sales total since 2007, as a slowly improving U.S. economy led to an upturn in pickup purchases across the industry.

That’s really important. Ford sells a huge number of F-Series pickups every month — 67,513 in March alone. Not only are the volumes high, but pickups are high-margin products as well. That means they contribute disproportionately to Ford’s bottom line in North America.

Fortunately, it looks as if that contribution was a hefty one in the first quarter. That bodes very well for the company’s first-quarter result in North America, which should compare well with the $2.1 billion result it posted in the first quarter of 2012.

But the picture elsewhere in the world is a less cheery one.

Trouble in Europe and South America
In Europe, where Ford is the No. 2 automaker after Volkswagen, steep recessions in many countries have pummeled new-car sales. Ford has been hammered more than most in the past few months, as the company’s reluctance to match rivals’ deep discounts has cost it quite a few sales.

Ford has a comprehensive turnaround plan in progress for Europe, but it still expects to lose as much as $2 billion in the region in 2013. It’s likely that first-quarter losses will be much greater than the $149 million it lost in Europe in the year-ago quarter, perhaps $500 million or more.

In South America, where Ford made $54 million in the first quarter of 2012, the company has already forecast a first-quarter loss of about $300 million. The problems are largely external: Weakening local currencies, inflation pressures, and stepped-up competition from market newcomers will all weigh on Ford, as Ford Americas President Joe Hinrichs told analysts last week. Ford still expects to break even in South America in 2013, but the near-term results could be challenging.

It’s …read more

Source: FULL ARTICLE at DailyFinance

Strong Sales Continue for Ford's Hot New Models

By John Rosevear, The Motley Fool

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March was another solid month for Ford , as the automaker once again posted U.S. sales gains well above analysts’ sales estimates.

Ford said on Tuesday that its March U.S. sales were up 6% over strong year-ago totals, well ahead of the 4.4% consensus expectation from analysts.

Solid sales of Ford’s F-Series pickups, which were up 16% over year-ago numbers, were a big contributor to the good results.

But the highlights were the exceptionally strong results for the automakers two newest models, the Escape SUV and the Fusion sedan.

In fact, Ford may be having trouble keeping up with demand for these hot models.

Ford’s latest models are becoming big sales hits…
“We are working harder than ever to keep pace with demand” for the Fusion and Escape, Ford’s U.S. sales chief Ken Czubay said in a statement on Tuesday. That demand has been torrid, as both models hit all-time highs for monthly U.S. sales in March.

Sales of the Escape were up more than 27% over year-ago totals, a strong sign that the redesigned model is finding its stride with customers.

Fusion sales were up just 6% over year-ago numbers, but that’s a more impressive amount than it might seem. Last March was another “best month ever” for the Fusion, as Ford was beginning the process of selling down inventories of the outgoing last-generation model.

It has been clear in recent months that the new Fusion, a visually striking car with many luxury features, has significantly elevated Ford’s game in this segment. The Fusion appears to be stealing sales from well-entrenched rivals like Toyota‘s Camry and Honda‘s Accord, the longtime class leaders.

Those strong March results capped the best-ever quarter for the two nameplates, Ford’s newest U.S. models. It’s a sign that the company’s “One Ford” product strategy is continuing to find favor with American customers.

But as Czubay’s comment on Tuesday suggested, the automaker is facing an interesting challenge: Building enough of these well-regarded vehicles to meet demand.

…but keeping up with demand will be a challenge
After years of painful restructuring, Ford is facing an interesting challenge in North America: Many of its factories are running at or near maximum capacity, but demand for its strong new products continues to increase.

In a way, this is a classic “good problem to have”. An industry rule of thumb is that auto factories break even at 80% of “full capacity”, generally defined as two eight-hour shifts. The further you get above that 80%, the more profitable your factory.

Ford said last fall that its North American plants were running at 114% of capacity, the automaker’s highest level in over 30 years. That means that some are already running around the clock, which is a big part of why Ford’s North American division has been so profitable recently.

But that also means that increasing production will require some expensive investments in new assembly lines.

Ford is already committed to making some of those investments. A <a target=_blank …read more
Source: FULL ARTICLE at DailyFinance