10-QPeriod: Q3 FY2016

FORD MOTOR CO Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 27, 2016For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company's Q3 2016 report shows a mixed financial performance compared to the prior year. While total revenues decreased, driven by a decline in the Automotive segment, net income attributable to Ford also significantly decreased, primarily due to lower Automotive segment pre-tax results. The company highlighted strong performance in North America, Europe, and Asia Pacific within its Automotive segment, despite overall revenue challenges. The Financial Services segment, largely driven by Ford Credit, demonstrated robust profitability and growth in receivables. Looking ahead, Ford indicated a cautious outlook for the global business environment, with modest growth expected. The company reaffirmed its full-year guidance for total adjusted pre-tax profit, expecting it to be around $10.2 billion, reflecting a second-best performance since 2000. Key areas of focus include managing production volumes, cost efficiencies, and investing in emerging mobility services.

Financial Highlights

42 data points
Beta

Revenue

$35.94B

14.7% Gross Margin

Net Income

$957.00M

2.7% Net Margin

EPS (Diluted)

$0.24

Total Assets

$234.96B

Cash & Equivalents

$13.34B

Free Cash Flow

$5.16B

Financial Statements
Beta
Revenue$35.94B
Cost of Revenue$30.67B
Gross Profit$5.28B
SG&A Expenses$2.66B
Operating Expenses$35.52B
Interest Expense$238.00M
Net Income$957.00M
EPS (Basic)$0.24
EPS (Diluted)$0.24
Shares Outstanding (Basic)3.97B
Shares Outstanding (Diluted)4.00B

Key Highlights

  • 1Net income attributable to Ford Motor Company decreased to $957 million ($0.24 EPS) in Q3 2016 from $2,192 million ($0.55 EPS) in Q3 2015.
  • 2Total revenues for Q3 2016 were $35.943 billion, down from $38.144 billion in Q3 2015, primarily due to a decrease in Automotive segment revenue.
  • 3Automotive segment pre-tax results for Q3 2016 were $1.084 billion, a significant decrease from $2.762 billion in Q3 2015, impacted by lower volume and higher warranty costs.
  • 4Financial Services segment pre-tax profit was strong at $552 million in Q3 2016, up slightly from $526 million in Q3 2015, with Ford Credit showing its best quarterly profit since 2011.
  • 5Company total assets increased to $234.963 billion as of September 30, 2016, from $224.925 billion as of December 31, 2015.
  • 6Ford maintained a strong liquidity position, with $24.3 billion in Automotive cash and $35.2 billion in total Automotive liquidity as of September 30, 2016.
  • 7The company reaffirmed its full-year 2016 adjusted pre-tax profit guidance of approximately $10.2 billion.

Frequently Asked Questions

The primary driver for the decrease in net income attributable to Ford Motor Company in the third quarter of 2016 was the significant decline in the Automotive segment's pre-tax results. This was mainly due to lower volume, unfavorable changes in dealer stocks, and higher warranty costs related to a recall, partially offset by favorable net pricing.

The Financial Services segment, primarily Ford Credit, performed robustly, achieving its best quarterly profit since 2011. Ford Credit's pre-tax profit was $552 million in Q3 2016, an increase from $526 million in Q3 2015. The company expected Ford Credit's full-year pre-tax profit to be around $1.8 billion.

Ford maintained a strong liquidity position. As of September 30, 2016, the company had $24.3 billion in Automotive cash and a total Automotive liquidity of $35.2 billion. Management believes these resources are sufficient to support ongoing investments, business transformation, debt obligations, and dividend payments.

Ford highlighted several risks including potential declines in industry sales volume in key markets, shifts away from profitable vehicle segments, price competition, currency fluctuations, commodity price volatility, supply chain disruptions, increased regulatory requirements, and potential cybersecurity threats. For Ford Credit, risks include higher-than-expected credit losses and lower-than-anticipated residual values for leased vehicles.