Key Takeaways From Ford Motors’ Q2 2017 Results

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Ford Motor Company (NYSE: F) announced its Q2 2017 results on July 26th and the company beat analysts’ expectations for both EPS (earnings per share) and revenues. Diluted EPS for the quarter stood at $ 0.51, slightly higher than the $0.49 number for the same period last year and revenues were at $ 39.85 billion, again marginally higher than the $39.48 billion number for the same period last year.  The higher EPS was primarily due to lower income tax paid by the company for this quarter. Below is a summary of the company’s performance for this quarter:

Wholesale units sold in Q2 2017 were lower by 3% compared to the same period in the previous year, however revenues were marginally higher. The company’s global market share declined by 0.1 percentage points in this quarter due to loss of market share in North America, Europe and Middle East, it gained market share in Asia Pacific and South America. Higher commodity costs and unfavorable exchange rates led to a lower pre-tax income in this quarter compared to the same period in the previous year.

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Regional Performance:

Below is a summary of Ford’s regional performance for Q2 2017:

Note: YOY change for numbers in percentages is the percentage point change.

China: China remained a bright spot for Ford in Q2 2017. The company reported the best ever June sales in the region and the best ever quarterly sales for its Lincoln brand, which is gaining popularity in the country.  Growth in market share in Asia Pacific was primarily due to higher share in China.

Europe: While GM has exited Europe, Ford Motors took a bold decision to continue in the region include troubled areas such as Russia. Results from the region have been weak in Q2 2017 with declining revenues due to a significant decrease in volumes as the economy suffers from the Brexit impact. Ford launched the “All New Fiesta” in Europe in this quarter and has received good initial reviews of the model.

Going Forward:

Operating under a new management team Ford is now focusing on certain key priorities as the business is viewed with “fresh eyes”

  • Using data modeling to identify sweet spots between volume, mix, and price to deliver higher transaction prices in an increasingly competitive market.
  • Renewed focus on innovation: Ford’s Chief Technology Officer will now report to the CEO as it works towards merging mobility and computing for future digital services.
  • Ford has changed its EPS guidance for 2017 from $1.58 to a range of $1.65 to $1.85. This change is primarily due to a favorable tax rate of 15% as against a normal adjusted effective tax rate of 30% for the company.

Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ford Motor

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