DETROIT Ford Motor Co. posted results on Thursday that were not as grim as expected for its second quarter that saw its U.S. factories shuttered for half the period to combat the spread of the coronavirus and car buyers sheltering in place.
Ford reported a $1.12 billion second-quarter net profit, pushed into the black by a $3.5 billion gain on the value of its stake in the Argo AI autonomous vehicle operation.
Without the one-time gain, the company lost $1.9 billion, or a 35 cents per share. But that was far better than the $1.17 a share loss Wall Street had expected, according to FactSet.
A year ago, Ford posted a $148 million net profit.
The automaker’s second-quarter revenue was down by about half from a year ago to $19.37 billion, which narrowly beat estimates.
Ford already was struggling before the pandemic hit and was in the midst of an $11 billion restructuring plan to control costs and roll out new vehicles. The coronavirus forced the company to close U.S. factories for more than seven weeks during the quarter. Analysts had expected over $5 billion in pretax losses.
But Chief Financial Officer Tim Stone said the company performed better than expected across the board during the quarter, allowing it to surpass expectations.
Ford, he said, had a safe and effective and very productive reopening of its factories in May, and vehicle shipments exceeded the company’s estimates from just 90 days ago. Cost controls were strong, discounts were lower, and pricing and pickup truck sales were better than expected, he said.
If there are no meaningful changes in the current economic conditions, Ford expects a $500 million to $1.5 billion pretax profit in the third quarter, Stone said.
The company is so confident in its recovery that this week it repaid $7.7 billion on its $15.4 billion revolving credit line, and it ended the period with over $30 billion in cash. Stone said Ford expects to have $20 billion in cash or more during the second half of the year.
The company burned through $4.9 billion in cash to fund its automotive operations in the first half of the year.
After the numbers were announced, Ford shares rose just under 1% to $6.80 in trading beyond the closing bell.
Ford booked the gain on Argo AI on June 1 after detaching it from the main company. Stone said the self-driving vehicle unit is valued at $7.5 billion, with Ford and Volkswagen owning 80% combined.
Cornavirus restrictions forced Ford to close factories in the U.S., its most profitable market, from March 19 to May 18. The plants came back up about halfway through the quarter.
The whole auto industry was expected to struggle during the quarter as the pandemic cut into production and sales. General Motors lost a lower-than-expected $806 million. Japans struggling Nissan reported a $2.7 billion loss (285.6 billion yen) for the period. Electric vehicle company Tesla may wind up the lone exception because it managed a $104 million profit.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor
Comments
0 comment