Ford Motor Co.'s third-quarter net income tumbled nearly 60 per cent as the company booked $1.5 billion in charges mainly for restructuring, and Chinese and U.S. sales fell.
The Dearborn, Michigan, automaker knocked a half-billion dollars off its full-year pretax earnings guidance. Ford now says it will make $6.5 billion to $7 billion, or $1.20 to $1.32 per share.
Ford's net income from July through September was $425 million, or 11 cents per share. Excluding restructuring charges, the company made 34 cents per share. That soundly beat Wall Street estimates that averaged 26 cents per share.
Revenue fell 2% to $36.99 billion, partly because the company bungled the launch of the new Ford Explorer SUV. Sales of the highly profitable Explorer were down 48% for the quarter as quality problems forced the company to hold shipments to dealers.
Ford's revenue also beat Wall Street estimates of $36.87 billion, according to data provider FactSet.
Included in the restructuring charges was $800 million to reduce the value of assets in India, where the company formed a joint venture with Mahindra, as well as ending its Chariot ride-hailing service.
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Chief Financial Officer Tim Stone said Ford is making progress, emphasizing improved free cash flow to $200 million.
He said the automaker is rolling out the right portfolio of new products, restructuring to improve productivity, and developing smart autonomous vehicles.
"We think the trajectory is improving across the business," he said.
Ford, which released earnings after the markets closed Wednesday, said higher than expected warranty costs, expected lower sales and income in China and increased discounts in North America caused the company to cut its full-year guidance.
Shares of Ford fell 2.5% to $8.98 in after-hours trading.
The company did show improvement in North America, its most lucrative market, where pretax profits were up 2.5% to just over $2 billion. Ford still lost $281 million in China, but that was better than a $378 million loss a year ago.
Ford had planned to send the Chicago-built 2020 Explorer to dealers during the normal model year changeover in late summer. But quality problems forced it to delay deliveries and even ship thousands of the SUVs to Michigan for repairs.
The company says dealers are now getting them in large numbers directly from the factory, although some are still being sent off for fixes.
As a result, Explorer sales slumped during the quarter, cutting into revenue and income. That helped to drag Ford's overall U.S. sales for the quarter down 5.1%, according to the Edmunds.com auto pricing website.
"Ford has almost fully made its transition away from cars, but the company has yet to show that this gamble is driving sales in a meaningful way," said Jeremy Acevedo, Edmunds' senior manager of insights.
"If the company can't turn the corner with a stable of brand-new SUVs right when shoppers want them most, there could be cause for concern."
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