Ford Profits Fall as it Warns on US Economic Risks
Carmaker giant Ford has reported weaker-than-expected second quarter profits, in the face of stagnant US sales and a tougher market in China. It also said that while it expects strong results for 2016, there are “risks” to reaching its targets due to US economic uncertainty.
Quarterly net income fell 9% to $1.97bn (£1.5bn) from $2.16bn a year earlier.
Ford shares fell by 9.5% in afternoon trading in New York on the news. Rival General Motors’ shares fell by 3.65%.
The company said that sales in the US and China were lower than anticipated in the quarter, and Ford also announced its first quarterly loss in Asia Pacific for three years.
Chief financial officer Bob Shanks said the US economic recovery was “maturing,” a development which would hinder sales growth later this year. Mr Shanks said Ford was maintaining its forecast of matching or beating last year’s pre-tax profit of $10.8bn, despite the weaker US market.
Ford is heavily dependent on the US economy. It derived 90% of its $2.99bn pre-tax profit from North America during the quarter. It expects the US economy to expand by 1.9% to 2.3% in 2016, down from previous expectations of 2.1% to 2.6%.
Ford also noted that its first-half operating profit of $6.8bn was its best ever. However, looking further ahead Mr Shanks warned that 2017 would be weaker than this year for vehicle sales in the US.