Ford CFO Bob Shanks has told investors that the company expects a lower earnings share and pre-tax profit in the first quarter, due to higher spending on commodities, investments and warranties, and a drop in sales volumes, particularly fleet sales.
Shares in Ford were down nearly one per cent at the news to (US)$11.66.
“We think we can do more with trucks, we think we can do more with utility vehicles, we can do more with performance and we’ve got plans in place to do that,” Shanks said at the presentation, which was live-streamed worldwide.
Shanks said U.S. sales should drop slightly to 17.7 million units, down from a record 17.9 million in 2016. Sales are expected to slip further in 2018 to 17.5 million.
Sales in China are also expected to dip from 27.5 million in 2016 to approximately 27.2 million.
Its pre-tax profit forecast for 2017 is unchanged at $12.8 billion, compared to $14.8 billion in 2016. Profits are expected to improve in 2018.
“We believe Ford’s announcement today is the initial confirmation of our investment thesis that pricing is deteriorating in North America and in select international markets, particularly China,” Buckingham Research Group analyst Joseph Amaturo said, according to Reuters.
This will “cause earnings and cash flow for Ford and GM GM.M to deteriorate and fall short of investor expectations and more importantly company guidance,” he added.
Sales of new Ford vehicles in New Zealand in the last three months have wavered, partially due to seasonal changes. Sales of commercial vehicles dropped 12.3 per cent and passenger cars dropped 2.73 in December.
In January, however, commercial sales were up 12.7 per cent and passenger sales grew 4.4 per cent compared to the previous year. Growth continued in February, which saw a 16 per cent rise in commercial sales and a 1.2 per cent increase in passenger sales.
Commercial figures are buoyed by the ongoing popularity of the Ford Ranger, which has a 19 per cent market share of commercial sales so far this year. The Rav4 and Escape SUVs – the market segment coveted by Shanks – were the highest-performing passenger vehicles for Ford showing the taste for larger vehicles is extending beyond the U.S.