Ford’s 2Q profit better than expected

Associated Press

DEARBORN, Mich.

Ford Motor Co. had a better-than-expected second quarter despite lower sales and upheaval in its executive ranks.

Net income rose 4 percent to $2 billion, thanks to a change in the company’s tax rate and a strong performance from its credit arm.

Ford’s new CEO Jim Hackett called it “a solid performance” but said the company still needs to get much more fit and nimble.

“We know we’re going to be quicker and more purposeful in our decisions about where to play and how to win,” Hackett told analysts and media in his first earnings call since he became Ford’s CEO. “We’re in an incredibly competitive industry and the competition just doesn’t relax because we’re thinking through a decision.”

Adjusted profits of 56 cents per share easily surpassed Wall Street expectations of 43 cents, according to analysts polled by FactSet. One-time items included a $248 million charge as the company shifted production of the Ford Focus small car from Mexico to China.

Ford’s automotive revenue of $37 billion was in line with Wall Street’s expectations. Total revenue rose 1 percent to $39.85 billion.

The elevated performance in the second quarter was due mostly to a lowering of the company’s corporate tax rate, from 30 percent down to 10 percent, Chief Financial Officer Bob Shanks acknowledged. Ford has put some overseas losses back on its books in anticipation of changes in the U.S. corporate tax code, Shanks said. The company expects to have a 15 percent rate this year, but that will return to 30 percent next year.

Ford’s full-year guidance shifted upward due to the tax change.