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F-150 pickups drive 3rd quarter earnings: Ford beats expectations

Phoebe Wall Howard, Detroit Free Press on

Published in Automotive News

Ford has faced a series of challenges this year, including shortages of its new Fiesta in Europe, carbon-monoxide issues involving police vehicles, recalls, and a CEO facing Wall Street analysts hungry for specifics related to cost-cutting and strategies related to autonomous vehicle technology and ride-sharing.

Ford said issues that kept the third quarter from being even stronger were higher steel costs, the Brexit vote that split the United Kingdom from Europe and negative impacts tied to currency exchange rates of the sterling, Canadian dollar, Indian rupee, Thai baht and Argentine peso.

Wall Street has failed to reward Ford this year as much as its rivals General Motors and Fiat Chrysler. Over the past three months, Ford and Tesla stock grew 5 percent, while GM stock jumped 26 percent largely because of its perceived leadership in driverless cars and shared mobility. For overall perspective, the S&P 500 gained 4 percent.

"We're freely embracing a revolution," Hackett said on his investor call Thursday. "I can assure you we're committed to transforming our business."

He highlighted driverless technology and partnerships with Lyft and Domino's, noting that pizza is a multibillion-dollar industry.

At the start of this month, Hackett said Ford planned to cut material costs by $10 billion and engineering expenses by $4 billion over five years, shift $7 billion of capital costs from cars to SUVs and trucks, embrace partnerships such as its recently announced alliance with India's Mahindra Group and deliver 13 new electric vehicle models in the next five years.

"This is the second earnings report we're seeing under Jim Hackett. Investors want to see results right way," said Rebecca Lindland, executive analyst at Cox Automotive. "And this is a very positive earnings report."

Analysts throughout the industry question the status of the luxury Lincoln brand, which generates fewer than 5 percent of Ford's U.S. sales.

"Ford, in some capacity, is handicapped by the fact that it has only Ford and Lincoln while other car companies have many more brands," Lindland said. "Ford has got to get to work on making Lincoln relevant."

A unique strength for Ford, she added, is that its buyers are among the most "domestically partisan" owners in the world, with some 90 percent identifying as loyal to American brands.

Shanks said there are "enormous" opportunities in China with upcoming products.

The company's message to Wall Street is clear and simple.

"This is a company that has delivered value and created value over the last 70 years," Shanks said. "We've given back, by the end of this year, over $15 billion to shareholders. We have delivered good performance consistently in a world that has been quite dynamic."

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