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Business Day

Ford Reports a Small Profit, but Its New Chief Faces Slowing Sales
By NEAL E. BOUDETTEJULY 26, 2017
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Ford F-150 trucks at a factory in Dearborn, Mich. The company is reviewing its global operations. Credit Rena Laverty/European Pressphoto Agency

Jim Hackett has said little about his plans to revitalize Ford Motor since he was named its chief executive two months ago, but the first earnings report in his tenure points
to some of the trouble spots he must address.

Ford Motor on Wednesday reported a modest gain in earnings for the quarter that ended in June, thanks to a big profit increase in its financing business and lower taxes.
But profit declined in Fords auto business in North America, its most important region, and the company struggled to make money elsewhere.

Ford can be a much better company, Mr. Hackett said in a conference call. We can deliver much more value for shareholders.

He said he was conducting a review of Fords global operations and expected to outline a new strategy in the fall. Without revealing any specifics, he said, we have to
ask ourselves: What do we have to believe to get the returns that we expect?

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One of his first moves as chief executive was to announce that Ford would import a new version of its Focus small car from China, avoiding the cost of building a plant
for it in North America. Ford had planned to build a $1.5 billion plant in Mexico but canceled it before Mr. Hackett took the helm.

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Related Coverage

Fords Signal to the Auto World: Here Comes China JUNE 21, 2017

Ford Chooses China, Not Mexico, to Build Its New Focus JUNE 20, 2017

Jim Hackett, Fords New C.E.O., Has a History of Turnaround Stories MAY 22, 2017

Ford, Trudging Into the Future, Ousts Mark Fields as C.E.O. MAY 22, 2017
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Over all, Ford reported net income of $2.04 billion in the period ending June 30, an increase of almost 4 percent from the same period a year ago, as Ford Credit reported
a 57 percent jump in profits. Ford also cut its tax bill by taking advantage of credits from previous losses in overseas markets. Its adjusted earnings per share, $0.56, beat
Wall Street estimates.

Still, it was a difficult quarter in Fords automotive operations. Industrywide, auto sales are slowing in the United States, and Fords North American auto division
generated pretax profit of $2.2 billion last quarter, a 19 percent drop from a year ago. It produced 841,000 cars and trucks in the quarter, but made only $2,614 in profit on
each one, on average, down from $3,206 in the second quarter of 2016.

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The results mean Ford is falling behind rival General Motors, which on Tuesday said it earned $3.5 billion in North American operating profit in the second quarter. But It
earned an average of $4,050 per vehicle.

After the earnings report, Ford shares opened lower and stayed down for the rest of the day. It closed down 1.9 percent, to $11.06 a share.

Fords difficulties will probably continue. The company said it planned to make 665,000 cars and trucks in the third quarter of this year, about 5 percent fewer than the
year-ago period.

In Europe, Fords profit plunged to $88 million, down from $379 million a year ago. It blamed disruptions from Britains planned exit from the European Union,
unfavorable exchange rates and the cost of introducing a new Fiesta compact, an important model in that region.

Ford, which is based in Dearborn, Mich., made money in Asia but suffered a loss in South America.

Mr. Hackett is a former chief executive of Steelcase, the office furniture manufacturer, who joined Fords board in 2013 and its executive ranks last year. He succeeded
Mark Fields, who had come under pressure because of a decline in profits, a sagging stock price and concerns about whether Ford was falling behind on self-driving cars.

A version of this article appears in print on July 27, 2017, on Page B4 of the New York edition with the headline: Ford Logs Modest Profit But Is Facing Challenges.
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Related Coverage
1. Fords Signal to the Auto World: Here Comes China JUNE 21, 2017

2. Ford Chooses China, Not Mexico, to Build Its New Focus JUNE 20, 2017

3. Jim Hackett, Fords New C.E.O., Has a History of Turnaround Stories MAY 22, 2017

4. Ford, Trudging Into the Future, Ousts Mark Fields as C.E.O. MAY 22, 2017

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