Making Sense of Ford’s Latest Financial Releases
I’ve seen quite a few headlines this morning about Ford’s latest financial releases.
One indicates that Ford’s annual profit streak now stands at three years and counting. The NYT indicates “Ford Posts Third-Straight Annual Profit”.
Elsewhere, it was all about the shares falling nearly 5% after the report was issued.
However, one has to actually read the articles as a group to get a full picture. Ford indeed has made it three straight years of profits, and this year got to take advantage of a one-time tax accounting charge that allowed it to reap a huge quarterly profit that boosted both quarterly and annual results.
The issue is that there was a significant slowdown in Europe and Asia and that excluding the special items, the net profit per share was below the consensus estimate. Losses in Europe quadrupled during the quarter and flooding in Thailand led to losses in Asia. Profits were slowed in South America due to competition.
Excluding the special items, profits fell to $1.1 billion, 20 cents per share, from $1.3 billion (30 cents per share) a year ago. The analysts average was expecting 25 cents per share, which would be nearly $1.2 billion.
The special item includes a tax-related gain of $12.4 billion as a result of an accounting change. That pushed the full year net income to $20.2 billion, which is the highest since 1998.
So, what can we take away from all this? Well, there’s the fact that the company’s struggles are largely the result of a natural disaster in Thailand, which can be overcome by a resumption of supply chain production. However, the problems in Europe and South America are more troublesome and point to choppy water ahead for the automaker.
In sum, it looks like a bumpy road ahead for Ford.