FILE PHOTO: The logo of Ford is seen during the 87th International Motor Show at Palexpo in Geneva, Switzerland March 8, 2017. REUTERS/Arnd Wiegmann/File Photo By Nick Carey | DETROIT
DETROIT Ford Motor Co reported a lower quarterly net profit on Thursday that beat analyst expectations amid higher commodity, engineering and recall costs and a drop in vehicle sales, and the company reiterated its pretax profit forecast for 2017.
The No. 2 U.S. automaker had warned investors in late March that higher expenditure and lower sales volumes would have an impact on its quarterly earnings.
Chief Financial Officer Bob Shanks told reporters at the company's headquarters in Dearborn, Michigan, that Ford's higher costs for 2017 were incurred largely in the first three months, its "toughest quarter" for the year.
Shanks said Ford's results for the rest of the year would be "about flat to a little bit better" compared with 2016.
Shares were up 1.9 percent in light premarket trading.
The company's results come at a time of uncertainty for the U.S. auto industry.
While sales of new vehicles have risen since the end of the Great Recession and hit 17.55 million units in 2016, analysts and investors are expecting a slight decline in sales this year.
Ratings agencies have warned of worsening credit and there are concerns that millions of nearly new leased vehicles due to flood the market over the next couple of years will further depress used-car values and hurt U.S. automakers' sales.
Shanks noted there have been "hair-on-fire stories about financing and used-car values" and conceded that the company's own used-car values at its finance arm were down 7 percent versus the same quarter in 2016.
Still, he said that Ford customers' credit scores remained high and we "feel really good about where credit is and our assumptions around credit."
"Clearly we're moving to a different stage of the cycle, but we think based on what we know that we’ve got it covered,” he said.
Ford maintained its expectation for a full-year 2017 pretax profit of around $9 billion, down from a record of $10.4 billion in 2016.
The company reported a first-quarter net profit of $1.6 billion, or 40 cents a share, down 36 percent from $2.5 billion, or 61 cents per share, a year earlier. Analysts had, on average, expected earnings per share for the quarter of 35 cents.
Automotive revenue for the quarter rose to $36.5 billion from $35.3 billion a year earlier. Analysts had expected automotive revenue of $34.7 billion.
(Editing by Bernadette Baum)