Ford Quarterly Earnings: By the Numbers

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Ford Motor Company (F) Friday reported a 34 percent drop in third-quarter earnings, and revenue fell due to the costs and sales losses associated with refitting assembly lines to build its all-new, aluminum-body F-150 pickup truck. The F-150, long the industry's best-seller and a key profit driver for Ford, remains the biggest question mark for investors' ability to assess Ford's future performance, due to the manufacturing challenges associated with it.

The company reported a pre-tax profit, excluding restructuring costs, of $1.2 billion in the quarter, down from $1.4 billion a year-earlier. Revenue fell 3 percent to $34.9 billion from $35.8 billion a year ago.

"If you go back to the beginning of the year, obviously we haven't done as well as we had hoped," said Chief Financial Officer Bob Shanks. Internationally, economic turbulence in Russia and Latin America resulted in greater-than-expected losses in both regions. And in Asia -– where sales have been growing rapidly –- the company's aggressive expansion effort is cutting into profits.

Still, the 3 percent drop in third-quarter revenue to $34.9 billion can to a large degree be linked to the shutdown of the F-150 plant in Dearborn, Michigan for retooling, which resulted in fewer trucks available for its dealers to sell.

This earnings release follows the earnings announcements from the following peers of Ford Motor Company -- Daimler AG (DDAIY), General Motors (GM) and Honda Motor (HMC).


• Summary numbers: Revenues of $34.9 billion, Net Earnings of $835 million and Earnings per Share (EPS) of $0.21.
• Performance focus more on revenue than bottom-line: decline in revenue versus same period last year of -3 percent; change in earnings a steeper decline of -34.4 percent.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):
Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014
Revenue Growth (YOY)11.8%1.7%0.2%-1.8%-3.0%
Earnings Growth (YOY)-22.0%90.2%-38.6%6.3%-34.4%
Net Margin3.5%8.2%2.8%3.5%2.4%
Return on Equity25.2%51.1%14.7%19.3%12.3%
Return on Assets2.6%6.0%1.9%2.5%1.6%

Market Share Versus Earnings Growth

Companies sometimes focus on growing their top-line (Sales or Revenues) more than their bottom-line (Earnings or Net Income). Capital Cube looks at revenue growth to understand a company's ability to grow its market share, and earnings growth for the company's ability to generate profits.

Ford's drop in revenue compared to the same period last year of -3 percent is better than its change in earnings, which was -34.4 percent -- suggesting perhaps that the company's focus is on market share at the expense of bottom-line earnings. But more critically, this revenue performance is among the lowest thus far in its sector – opening up a potential loss in market share as well this quarter. Also, for comparison purposes, for the three months ended September 30, revenues changed by -6.7 percent and earnings by -36.3 percent compared to the second quarter.

EPS Growth Versus Earnings Growth

Ford's decline in Earnings per Share (EPS) of -32.3 percent is better than its drop in earnings of -34.4 percent, compared to the same period last year. In addition, this decline in earnings is worse than the average change of its peers announced thus far, suggesting that the company is losing ground in generating profits compared to its peers.

Supporting Data
Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014
Revenue Growth (YOY)11.8%1.7%0.2%-1.8%-3.0%
Peer Average Revenue Growth (YOY)7.6%2.4%1.4%1.7%1.8%
Earnings Growth (YOY)-22.0%90.2%-38.6%6.3%-34.4%
Peer Average Earnings Growth (YOY)-14.2%53.7%15.2%-7.8%1.2%
Net Margin3.5%8.2%2.8%3.5%2.4%
Peer Average Net Margin4.4%6.1%3.1%4.5%4.3%
Peer Average EPS$0.57$0.71$0.56$0.62$0.80
Return on Equity25.2%51.1%14.7%19.3%12.3%
Peer Average Return on Equity13.5%21.2%10.2%15.4%12.6%
Return on Assets2.6%6.0%1.9%2.5%1.6%
Peer Average Return on Assets3.8%5.0%2.2%3.5%3.5%

Company Profile

Ford Motor Co. is engaged in the manufacturing and distribution of automobiles. It operates through two business sectors: Automotive and Financial Services. The Automotive sector operates through four business segments: North America, South America, Europe and Asia Pacific Africa. The North America segment is engaged in the sale of Ford and Lincoln brand vehicles, service parts and accessories in North America. The South America segment is engaged in the sale of Ford brand vehicles and related service parts and accessories in South America. The Europe segment is engaged in the sale of Ford brand vehicles and related service parts and accessories in Europe, Turkey and Russia. The Asia Pacific Africa segment includes primarily the sale of Ford brand vehicles and related service parts and accessories in the Asia Pacific region and South Africa. The Financial Services sector operates through two segments: Ford Credit and Other Financial Services. The Ford Credit segment provides vehicle related financing, leasing, and insurance through the company's wholly owned subsidiary Ford Motor Credit Co. LLC. The Other Financial Services segment includes a variety of businesses, including holding companies and real estate. Ford Motor was founded by Henry Ford on June 16, 1903 and is headquartered in Dearborn, MI.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of F.
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