Dearborn’s Ford Motor Co. reported its first quarter 2019 financial results Thursday and, while its revenue and net income were down, company earnings before interest and taxes (EBIT) were up $262 million compared to the first quarter 2018.
Ford attributes the reduction in revenue to global industry decline, the discontinuation of the North American Focus, as well as the production ramp up for the all-new Explorer. Net income was down, due to special items charges of about $600 million, mostly associated with the exit of heavy truck operations in South America and the redesign of European operations including the restructuring of the company’s Russia joint venture.
Strong performance in North America and at Ford Credit boosted the automaker’s adjusted EBIT $262 million to $2.4 billion.
“With a solid plan in place, we promised 2019 would be a year of action and execution for Ford, and that’s what we delivered in the first quarter,” says Jim Hackett, president and CEO of Ford. “We’re pleased with the progress and the optimism that it brings. Our goal remains to become the world’s most trusted company, designing smart vehicles for a smart world.”
In North America, share and revenue both improved year over year, driven by the performance of franchise strengths in trucks and utilities. EBIT was $2.2 billion, up year over year, due to stronger net pricing and product mix. EBIT margin was 8.7 percent, improved by nearly a percentage point from the same quarter last year.
Meanwhile, F-Series continued to perform well, with sales and segment share both up year over year and retail average transaction price flat at about $47,000 per vehicle, despite all-new products from competitors. The region also will benefit this year from a significant wave of product launches focused on trucks and utilities, including Ranger, Super Duty, Explorer and Escape, as well as the all-new Aviator and all-new Corsair from Lincoln. By the end of 2020, Ford will have replaced 75 percent of its current U.S. product lineup.
“This quarter was a really good start for the year,” says Bob Shanks, chief financial officer at Ford. “We expect first quarter EBIT to be the strongest of the year due to seasonal factors and major product launches ahead. It does, however, put us on track to deliver better company results in 2019 than last year.”
Outside North America, the company had an EBIT loss of $196 million, which was an improvement of $632 million from the prior quarter, with Europe, Asia Pacific Operations, and Middle East and Africa all profitable. In South America, Ford is moving toward a more lean and agile business model. The automaker announced in the quarter that it would close its São Bernardo manufacturing facility, ceasing production of heavy trucks and the Fiesta small car.
Ford Credit had EBT of $801 million, up 25 percent year over year and the best quarterly result since 2010, driven by favorable lease residual values and credit loss performance.
Ford’s balance sheet remains strong, with $24.2 billion in cash and $35.2 billion in liquidity, both above company targets of $20 billion and $30 billion, respectively.
In addition, following the end of the quarter, on April 23, Ford closed on a $3.5 billion supplemental credit facility, further strengthening its liquidity and providing additional financial flexibility. This is on top of Ford’s corporate revolving facility of $13.4 billion.