Here’s What To Expect From Ford’s Q2 2017 Earnings

+15.77%
Upside
12.18
Market
14.10
Trefis
F: Ford Motor logo
F
Ford Motor

Ford Motor Company (NYSE:F)is set to report earnings for the first quarter of fiscal year 2017 on Wednesday, July 26. These results come after a significant leadership change announced by the company in May 2017 and will be the first results under the new CEO. (Read Does Ford’s New CEO Indicate A Change In Strategy?). The company was off to a rough start for 2017 with net income declining by 35% in Q1 2017. This decline was due to increased costs associated with its  Superduty pick-up and a decline in its U.S. sales. For Q2 2017, analysts continue to expect a year on year decline in the company’s earnings per share (EPS).  Ford’s consensus EPS estimate for Q2 2017 stands at $.43 which is around 17% lower than the EPS of $.52 for the same period last year. Consensus revenue estimates stand at $37.06 billion, slightly higher than the $36.93 billion figure for the same period last year.  In a slow industry environment, with a new management team in place we will be watching how Ford is navigating the transition in the automotive industry with an increased focus on electric vehicles and newer technologies.

U. S. Sales On A Declining Trend

As the retail automotive segment in the U.S. softens, Ford is facing the impact of this industry slowdown. The company’s sales in the U.S. for the past three months have been declining primarily due to headwinds from the retail segment. Below is a summary of the company’s U.S. sales in the past three months:

Relevant Articles
  1. With F-150 EV Production Cut 50%, What Lies Ahead For Ford Stock?
  2. What To Expect From Ford’s Q3 Earnings?
  3. Will Strong F-Series Sales Power Ford’s Q2 Results?
  4. Can Ford Stock Return To Its Pre-Inflation Shock Highs
  5. Higher Truck Sales Will Drive Ford’s Q1 Results
  6. Ford’s Q4 Results Were Tough, But Things Could Get Better

From the above table it can be seen that the biggest decline in sales for Ford is in the Car segment, however the profitably SUV and Truck segment continues to perform better. This should impact the profitability positively in Q2 2017.

China Remains The Bright Spot

The company’s Lincoln segment is the primary revenue driver for it in China. This brand recorded an 84% increase in sales in June 2017 (compared to June 2016) making this month the company’s best June in China. Ford’s sales increased 15% in the region and the company is now planning to produce the luxury SUV in China starting 2019, given the high demand for this vehicle in the region. However, in order to compete better in China Ford had cut the prices of its vehicles and this might impact the margins and profitability of the company adversely.

Europe Shows Positive Trend

Unlike GM, Ford continues to operate in Europe, including troubled regions such as Russia. The first half of 2017 has been positive for the company in Europe, with sales up 3.7% compared to the previous year in its traditional Eur 20 markets. In June 2017, the company achieved an increase in market share in some European countries such as Germany and Britain, but total sales in the region declined by 1%.

Ford’s revenues are likely to be impacted by the softening U.S. industry environment, however given the strong sales of its luxury brands during Q2 2017, the company is likely to meet its EPS target during this quarter. We will be watching the new management’s outlook for the future of the company.

 View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research