Ford Q1 net profit falls 34% on one-time charges

DETROIT — Ford's first-quarter net income fell 34 percent to $1.15 billion, on one-time charges, but the company said it was on track to generating better results in 2019 than it did last year as CEO Jim Hackett’s global reorganization starts to take root.

Ford’s earnings before interest and taxes in the latest quarter rose 12 percent to $2.45 billion, including a 14 percent gain in North America behind strong sales of trucks and SUVs, in what Hackett has dubbed “a year of action.”

Following the release of the company's first-quarter financial results, Ford shares surged above $10 each in after-hours trading for the first time since August. .

“It was a good start, but we still have three quarters of the year to go,” Ford CFO Bob Shanks told reporters Thursday. “We’re happy, but our enthusiasm is well under control.”

The company's North American profit of $2.2 billion reflected a margin of 8.7 percent, 0.9 percentage points higher than in the first quarter of 2018.

The results were driven by a stronger mix of more profitable vehicles, including a strong quarter for F series and the North American launch of the Ranger midsize pickup in January.

Ford last year announced it was cutting sedans from its lineup. While analysts and investors remain skeptical, Hackett on Thursday said the company “doesn’t intend to lose any of these customers long term” and that the decision “was absolutely the right call.”

Shanks said the move, by the end of the year, would contribute positively to the tune of “hundreds of millions of dollars.”

Ford made a small profit in Europe and results improved in China, the Middle East and Africa.

Globally, revenue fell 4 percent to $40.3 billion and profit margins declined 1.3 percentage points to 2.8 percent.

Ford attributed a majority of its $600 million decline in net income to one-time charges related to its global redesign, including exiting the heavy-truck market in South America and restructuring its operations in Europe.

It took a $24 million hit from ongoing layoffs of salaried employees in North America, a process Shanks said is “coming toward its end.”

Additional charges in the quarter included an $11 million hit for the closing of its Chariot ride-sharing program and a $67 million charge for ending U.S. production of the Focus.

Of the $11 billion in total charges Ford expects to book related to its global restructuring, Shanks said $3 billion to $3.5 billion will occur this year, including the nearly $500 million this quarter.

Ford Credit earned an $801 million profit, up 25 percent from a year ago and its best quarterly result since 2010.

Shanks said the first quarter will be the strongest of the year as Ford prepares for a slew of new model changeovers, including redesigns of the Escape and Explorer crossovers, later in the year.

“It’s the beginning of the game, not game over,” Shanks said. “We feel very encouraged by the start to the year.”