Unfortunately, global competition gets stiffer for Ford Motors. The motor corporation's third-quarter profit fell by half compared to a year ago, as a slowing industry, along with the costs of launching its aluminum Super-Duty pickup truck and recalling 2.4 million vehicles for faulty door latches, hurt the Dearborn, Mich.-based company's results.
Net income dropped to $957 million from $2.19 billion a year earlier, while adjusted earnings per share were 26 cents, six cents better than analysts had expected. Ford focused on cost-cutting to offset higher spending in other areas, and benefited from higher pricing as well.
While Ford continued to lose money in South America, Africa and the Middle East, it saw improved results in Europe and Asia. Still, it was Ford's core North American business that dragged down company-wide results.
Key metrics were down across the board in North America: vehicles sales, revenues, market share, operating margin and pre-tax profits. Ford said the results were in keeping with what it forecast at the beginning of the year: a strong first half, followed by a weaker second half.
The launch of the 2017 Super-Duty pickup - the first redesign of this high-margin truck in 18 years - was certainly a factor weighing down Ford's results in the quarter. Any new product launch is costly due to higher marketing expenses and ramp-up costs, yet sales are slow because the products aren't yet in showrooms.
The cost of the door latch recall was pegged at $600 million. Chief Financial Officer Bob Shanks said setting that aside, Ford's operating margin in North America was 8.4% - a very respectable number in the midst of a product launch like the Super-Duty.
Shanks emphasized that because of Ford's strong first half, the company is still on track to meet its target of $10.2 billion in pre-tax profit for 2016. He noted it was second only to 2015′s record $10.8 billion pre-tax profit.
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