Ford Motor Co. in Dearborn has announced second quarter financial results that included reported net income of $148 million, while the net income margin was 0.4 percent and earnings per share (EPS) was $0.04, all down as a result of ongoing global redesign and restructuring activities, primarily in Europe and South America.
The initiatives accounted for $1.2 billion of charges for special items. The company’s adjusted EBIT of $1.7 billion and adjusted EBIT margin of 4.3 percent were both flat. Adjusted EPS was $0.28. Results were affected by a $181 million mark-to-market valuation adjustment loss on Ford’s shares in Pivotal Software, a cloud-based software company.
Excluding the Pivotal Software revaluation, adjusted EBIT would have been $1.8 billion and adjusted EPS would have been $0.32. The company said its cash and liquidity balances remain strong and above targets, finishing the quarter at $23.2 billion and $37.3 billion, respectively.
Cash flow from operating activities for the first half of 2019 was $10 billion, up $1.5 billion. Adjusted free cash flow for the same period was $2.1 billion, up 80 percent.
“Midway through this key year of action, we are pleased with the progress we are making toward creating a more dynamic and profitable business,” says Jim Hackett, president and CEO of Ford.
Automotive earnings before interest and taxes (EBIT) in the quarter was $1.4 billion, up 19 percent, driven by improvement in mix and net pricing, especially North America’s franchise strengths in trucks and sport-utility vehicles. This is the second consecutive quarter of EBIT growth in automotive, the first time the company has achieved that in more than three years.
Excluding pension and other post-employment benefits, structural costs also improved in the quarter. The company said it further strengthened its worldwide product portfolio with launches of the all-new Ford Explorer and Police Interceptor Utility and new-to-market Lincoln Aviator, and unveiled the Ford Puma, an all-new compact crossover for the European market.
And in early July, Ford and Volkswagen announced an expansion of their global alliance on commercial vehicles to include electrification. The two companies also said that VW will join Ford in investing in Argo AI, the autonomous-vehicle platform company in Pittsburgh.
Pending regulatory approval, Ford and VW will have equal stakes in Argo AI, and combined will own a substantial majority of the AV company.
On a related front, Ford Credit reported send-quarter earnings before taxes of $831 million, up 29 percent. The company reported favorable loss metrics, which reflect healthy consumer credit conditions, while auction values for off-lease vehicles performed better than expectations.
