Ford Motor (f) reported a better-than-expected quarterly net profit due to a lower tax rate and increased sales of…
Ford Motor (f) reported a better-than-expected quarterly net profit due to a lower tax rate and increased sales of more profitable pickup trucks in the U. S., and the company said that reduced tax rate would boost its full-year profits.
But the No. 2 U. S. 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 U. S. 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.
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Rival General Motors (gm) 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. But its shares fell as the stock market zeroed in on a sharp rise in unsold cars sitting on dealers’ lots.
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, according to Thomson Reuters I/B/E/S.
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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 U. S.. Wall Street had expected an effective tax rate of 30 percent for 2017.
The Dearborn, Michigan-based company reported second-quarter net income of $2.04 billion, or 51 cents per share, up from just under $2 billion, or 49 cents per share, a year earlier. Excluding one-time items, earnings per share were 56 cents, above a consensus forecast of 43 cents.
In pre-market trading, Ford shares were down 2 cents from Tuesday’s official close at $11.25.
