Ford’s Q2 profit falls 9% on trouble in US, China

Ford Motor Co.’s net income fell 9 per cent to $2.0 billion in the second quarter as the company struggled with flattening U.S. sales and a tougher market in China.

Ford said that its full-year guidance, which calls for a pre-tax profit of $10 billion to $11 billion – remains intact but is at risk.

The company’s shares fell almost 7 percent to $12.88 in premarket trading.

Yet, Ford recognized a need to change course. Among the approaching issues in the second 50% of the year is the costly dispatch of Ford’s new aluminum-sided Super Duty pickup truck and a normal $145 million hit to deals in Britain due to its vote to leave the European Union.

The bad news came from North America and Asia. Ford’s Chief Financial Officer Bob Shanks said after an unprecedented growth streak, the U.S. market is starting to plateau. North American sales were flat versus a year ago, and Ford’s market share in the region didn’t budge despite higher incentive spending. Pretax results in the region fell 5 per cent to $2.7 billion. Shanks also said Britain’s exit vote will probably cost the company $400 million to $500 million every year in lower deals and weaker cash until the exit is finished. There’s an excessive amount of instability to anticipate much after that, Shanks said, however, the company is thinking about how to relieve its dangers. Ford is one of the top-selling brands in the U.K. and furthermore, has engine and transmission plants there.

“We don’t see growth, at least in the near term,” Shanks said. Ford lowered its estimates for full-year industry sales in the U.S. and said next year’s sales will be even weaker.

In Asia, Ford recorded its first pretax loss of $ 8 million, in more than three years. Shanks said Ford sold fewer commercial vehicles in China and spent heavily to upgrade its factories. The weaker yuan also impacted sales of its luxury Lincoln brand.

Europe, long a drag on profits, was a splendid spot, with deals up 11 percent. Pretax benefits in Europe practically tripled to $467 million regardless of a hit from Britain’s vote to leave the European Union. More grounded deals in Russia were one contributing variable.

The profit, of 52 cent for every sale, contrasted with a benefit of 54 cent for every sale in the April-June period year back. That missed Wall Street’s desire for a 60-cent benefit, as indicated by investigators surveyed by FactSet.

Income was up 6 percent to $39.5 billion, beating investigators’ desires. Passage sold 1.7 million vehicles amid the quarter, which was level from a year back.