Ford Motor (F 11.73, +0.13) has added 1.1% in pre-market after beating earnings and revenue expectations for the first quarter.
The automaker reported above-consensus first quarter earnings of $0.39 per share on a 3.5% year-over-year increase in revenue to $36.48 billion, which was also ahead of estimates.
While the industry heavyweight surpassed top- and bottom-line estimates, earnings per share declined by more than 40.0% year-over-year. The company's profit declined by $1.60 billion to $2.20 billion due to higher costs, lower volume, and exchange rate-related headwinds. The increase in costs was fueled by higher warranty expense, investments in new products, and rising commodity costs.
Looking at the segment breakdown, North American revenue increased by $100 million to $24.00 billion while wholesales declined by 43,000 to 771,000. Market share declined 50 basis points to 14.1% due to lower fleet sales. Higher costs led to a 460-basis point decline in operating margin, which slipped to 8.3%. North American pre-tax profit declined $1.10 billion to $2.00 billion.
South American revenue rose $300 million to $1.10 billion while wholesales increased by 7,000 to 70,000. Market share increased by 60 basis points to 9.0% thanks to strong demand for Ford Ka and Ford Ranger. Operating margin improved by 790 basis points, but remained negative at -22.5%. The company recorded a loss of $244 million after last year's loss checked in at $256 million. The company expects that its South American loss will continue diminishing as the year goes on.
European revenue increased by $700 million to $7.60 billion while wholesales increased by 50,000 to 449,000. Market share improved by 20 basis points to 8.1% thanks to demand for Ford Kuga and commercial vehicles. Operating margin declined 400 basis points to 2.3%. Segment profit declined by $258 million to $176 million. The company expects to maintain profitability, but at lower levels than last year due to a weak British pound.
Middle East & Africa revenue declined by $300 million to $600 million, partly due to unfavorable dealer stock changes. Wholesales were down 16,000 to 30,000 and market share declined 80 basis points to 3.8%. Operating margin fell 1090 basis points to -12.4% and the segment recorded a loss of $80 million, which was $66 million worse than its loss one year ago.
Asia Pacific revenue increased by $500 million to $3.20 billion as results in all major markets outside of China improved. Wholesales declined by 15,000 to 383,000 while market share declined 40 basis points to 3.4%. Operating margin fell 430 basis points to 3.9% while segment profit declined by $96 million to $124 million.
Ford Credit recorded a first quarter pre-tax profit of $481 million, which was down $33 million year-over-year. The company expects that its financing arm will deliver a pre-tax profit of about $1.50 billion in 2017.
The automaker reaffirmed its outlook for the year, expecting to generate a pre-tax profit of about $9.00 billion.