Ford’s net profit tumbled 86% in the second quarter due largely to restructuring costs in Europe and South America.
Net income for the April-through-June period dropped to $148 million, or 4 cents per share. Without the charges the company made 28 cents per share. Revenue was flat at $38.9 billion.
On average, analysts surveyed by FactSet expected earnings 31 cents per share on revenue of $38.49 billion.
Chief Financial Officer Tim Stone says the company had charges of $1.2 billion as it moved to close factories in Europe and South America.
He says Ford already is seeing an impact from its global fitness measures that included a reduction of 7,000 white-collar workers.
Ford also says its results include a $181 million valuation loss on an investment in a software company, trimming 4 cents off adjusted earnings per share.
Stone said the company is in the early stages of its restructuring, but already is seeing improvement in some regions. Free cash flow also improved by 80% to $2.1 billion in the first half of the year.
“We’re already starting to see some early benefits,” he said. “A lot of work to do.”
The company expects improvement in the second half of the year as more new big SUVs hit dealerships and more of the restructuring takes hold. Ford on Wednesday forecast pretax adjusted earnings of $7 billion to $7.5 billion for all of 2019, compared with $7 billion last year. The company previously had only said that pretax earnings would improve.
Full-year adjusted earnings per share are forecast to be $1.20 to $1.35, up from $1.30 in 2018. Previously it did not give per-share guidance.
Ford’s U.S. sales fell nearly 5% in the second quarter, according to the Edmunds.com auto pricing site, as the company exited most of its passenger car business. Edmunds, which provides content for The Associated Press, said Ford’s average vehicle sale price rose 2.8% to $41,328.
In North America, Ford’s biggest profit center, pretax earnings fell 3% to just under $1.7 billion. But in Europe, the company showed its first year-over-year improvement in two years with a pretax profit of $53 million versus a $73 million loss last year. Ford’s loss in China shrank 68% to $155 million. The South America loss widened 15%, though, to $205 million. Middle East and Africa swung to a loss of $45 million from a profit of $49 million.
Ford Credit pretax income rose 29% to $831 million.
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