Ford Motor Co. (NYSE: F) reported first-quarter 2018 results after markets closed Wednesday afternoon. For the quarter, the automaker posted adjusted diluted earnings per share (EPS) of $0.43 on revenues of $41.96 billion. In the same period a year ago, the company reported EPS of $0.30 on revenues of $39.15 billion. Analysts were looking for EPS of $0.41 and revenues of $37.16 billion.
Adjusted pre-tax profit rose fell 19%, from $2.52 billion in the first quarter of 2017 to $2.19 billion. Higher net income of $1.7 billion was greater “than explained by a lower tax rate,” but no further explanation was offered. We take that to mean that not all the increase was the result of a lower tax rate.
For North America lower pre-tax earnings were “more than explained” by higher commodity costs. The company’s pre-tax margin of 7.8% was down by 1.1 percentage points and still well short of management’s target of 10%. The company also plans to reduce costs by $11.5 billion by 2020.
CEO Jim Hackett said:
We are committed to taking the appropriate actions to drive profitable growth and maximize the returns of our business over the long term. Where we can raise the returns of underperforming parts of our business by making them more fit, we will. If appropriate returns are not on the horizon, we will shift that capital to where we can play and win.
Automotive segment revenues totaled $39 billion for the quarter, up by $2.5 billion year over year but automotive pre-tax margin slipped by 1.1 percentage points to 7.8%.
CFO Bob Shanks said:
This quarter is in line with expectations and consistent with our outlook for the full year, but we know we can, and must, do better. The entire team is focused on improving the operational fitness of our business, as well as meeting and exceeding our accelerated 2020 target of 8 percent margin and ROIC in the high teens.
Ford’s shares traded up about 2.2% in after-hours trading Wednesday at $11.35 after closing at $11.11, in a 52-week range of $10.14 to $13.48. The consensus 12-month price target on the stock was $12.34 before the report was released.
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