Ford 1Q profit down on recalls, lower sales, but tops Street

Ford is seen during the 87th International Motor Show at Palexpo in Geneva

Ford is seen during the 87th International Motor Show at Palexpo in Geneva

Ford said its sales dropped slightly in the first quarter to 1.7mln vehicles, with its North American market share dropping as it sold fewer vehicles to rental fleets, although sales to individual USA buyers were higher. The Dearborn, Michigan-based company reported a first-quarter net profit of $1.6 billion (1.25 billion pounds), or 40 cents per share, down 36 percent from $2.5 billion, or 61 cents per share, a year earlier.

Earnings per share for Ford were 39 cents in comparison to 36 cents that Wall Street was expecting.

Ford Motor's profit in the first quarter of 2017 fell more than one third from last year's record quarter but the company maintained its profit outlook for the whole year.

Ratings agencies have warned of worsening credit and there are concerns millions of almost new leased vehicles due to flood the market over the next couple of years will depress used-car values and hurt US automakers' sales.

USA auto sales hit fresh records in 2016, but industry experts expect some cooling in 2017. Until then, earnings will continue to be pinched in a USA market that's also seeing auto demand roll back following a seven-year growth spurt. Ford singled out its Lincoln division, F-150 and Super Duty as contributing to higher transaction prices in the US market and helping to deliver a still-healthy profit.

Ford made a pre-tax profit of $176 million in Europe, where it posted its eighth-consecutive quarterly profit. Recall expenses also hurt first-quarter earnings.

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Ford CEO Mark Fields said Ford's quality is improving.

Revenue for the first quarter rose 4% to $39.1 billion, driven by a favorable mix of pickup trucks and sport-utility vehicles. Declining used-car values also are dragging on results for its financial-services unit.

Ford said it still expects to post a full-year 2017 pretax profit of around $9 billion, down from a record of $10.4 billion in 2016.

But the contrasts between Ford, which released its Q1 earnings report Thursday, and Daimler AG, which released its Q1 report Wednesday, illuminate the differences between a commodity automaker and one that deals primarily in luxury vehicles.

"It was a tough quarter for China", Shanks said.

Ford's operating loss in South America continued, with the auto maker reporting $244 million in red ink for the just-ended quarter, compared with $256 in the same year-ago period. "Ford's balance sheet remains strong - ready and able to support our plans for growth and to protect against adverse changes in the business cycle", Shanks said.