Detroit: Ford Motor Co yesterday reported a better-than-expected quarterly net profit due to a lower tax rate and increased US sales of more-profitable pickup trucks, but forecast a slightly lower 2017 pre-tax profit, sending its shares down 2.3 percent.
The US automaker also leaned heavily on consumer discounts during the quarter and the cost of its inventories rose, and the company warned that its full-year automotive operating margin and cash flow would be lower than in 2016.
Ford’s results come at a time when the US auto industry is bracing for a downturn after four consecutive months of declining sales. Analysts are concerned about the high discounts automakers are using to sell their vehicles and high supplies of unsold vehicles.
Rival ,General Motors Co on Tuesday reported a better-than-expected quarterly profit helped by cost-cutting and promised to scale back production to cut its burgeoning inventories in the second half of the year.
Ford said that for the full year it now expects adjusted earnings per share in a range from $1.65 to $1.85, above the $1.51 expected by Wall Street.
But Chief Financial Officer Bob Shanks said this would be largely due to a tax rate of 15 percent for the year as Ford pulls forward deferred tax losses from outside the United States.
Wall Street had expected an effective tax rate of 30 percent for 2017. The company reported second-quarter net income of $2.04bn, up from just under $2bn, a year earlier. In pre-market trading, Ford shares were down 2 cents from Tuesday’s official close at $11.25.
