Ford Posts 35% Drop in Profit for First Quarter

The company posted earnings per share of 40 cents, and first-quarter revenue of $36.5 billion, beating Wall Street forecasts.

The No. 2 USA automaker, which reiterated its pretax profit forecast for 2017, warned investors in late March that higher costs and lower sales volumes would hurt quarterly earnings.

Ford Motor's profit in the first quarter of 2017 fell more than one third from last year's record quarter but the company maintained its profit outlook for the whole year.

The company had to spend $295 million on two safety recalls, one for engine fire risk, and another for faulty door latches.

"The first quarter was an investment in Ford's future", said Ford President and CEO Mark Fields in a statement.

Ford Motor Co.'s profits fell 35 percent during the first quarter to $1.6 billion.

The American automaker knew profits would suffer on the back of recalls and higher costs for warranties and materials.

Ford's total vehicle sales were worse than industrywide deliveries of cars and light trucks, which declined 1.5% to 4.03 million, according to Autodata Corp. Ford's Q1 net income of $1.6 billion compares with Daimler's Q1 net of $3 billion, double of what it earned a year earlier.

Ford attributed the decline in profit to higher costs along with a slight decrease in market share and lower net pricing that was caused by higher incentive spending.

Ratings agencies have warned of worsening credit and there are concerns that millions of almost new leased vehicles due to flood the market over the next couple of years will further depress used-car values and hurt US automakers' sales. That would be $US1.4 billion less than the automaker's results in 2016. The company earned a pretax profit of $2 billion in the region, down 45 percent from a year ago. Ford has also focused on developing self-driving cars and ride-sharing services while the company prepares to roll out its next round of lucrative models, including an updated F-150 and new large SUVs.

Ford is coming off one of its most profitable periods in history with its North American business benefiting from two years of record sales growth for the USA auto industry and surging demand for its highly lucrative trucks and SUVs amid low gasoline prices.

Ford's shares traded up about 2.3% in Thursday's premarket to $11.85, after closing at $11.60 on Wednesday, in a 52-week range of $11.07 to $14.22.

Cash flow from financing activities was $1,120 million for the quarter, down 73.83 percent or $3,159 million, when compared with the past year period. Revenue for the quarter rose to $39.1 billion from $37.7 billion a year earlier.

Ford's operating loss in South America continued, with the auto maker reporting $244 million in red ink for the just-ended quarter, compared with $256 in the year-ago period. The Ford Credit business pretax profit was $481 million.

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