DEARBORN, Mich. - Ford Motor Co. said Thursday that its net income fell 22 percent in the third quarter, to $1.27 billion, as the company took special charges related to restructuring its European operations and its U.S. pension obligations.
Still, the country’s No. 2 automaker beat analysts’ expectations by setting a record for third-quarter pretax profit of $2.6 billion, up $426 million, a performance that led Ford to raise its profit forecast for the year. It was the company’s 17th consecutive profitable quarter.
The $498 million in special items included $250 million for charges related to plant closures in Europe and $145 million as part of Ford’s voluntary lump-sum pension payout program for salaried retirees in the United States.
“It was a really, really great quarter,” Bob Shanks, Ford chief financial officer, told reporters at the automaker’s Dearborn headquarters Thursday.
The company’s performance was “encouraging from a number of perspectives,” with growth in wholesale volume, revenue and market share in North America, South America, Europe and Asia-Pacific.
Ford’s revenue rose 12 percent to $36 billion, with its strongest results in North America and the Asia-Pacific region, where the company reported a third-quarter record of $126 million in pretax operating profit and 3.7 percent market share.
The shares rose 24 cents, or 1.4 percent, to close Thursday at $17.76.
David L. Schoch, group vice president and president of Ford Asia Pacific, told reporters earlier this month that the company’s $4.9 billion investment in China and its new lineup of sport utility vehicles and midsize sedans was beginning to help Ford gain market share there against more established competitors such as General Motors and Volkswagen.
Ford’s sales rose 31 percent in the Asia-Pacific region for the first nine months of the year, with most of that growth coming from China, Ford’s second-biggest market after the United States.
Schoch said the automaker hopes to double its market share in China to 5 percent this year.
The company continued to lose money in Europe, with a pretax loss of $228 million for the quarter, though that was 51 percent less than a year ago, indicating that the losses are ebbing there, Shanks said.
Overall, Ford has changed course from the days when Alan R. Mulally, the chief executive, mortgaged the automaker’s assets to borrow more than $23 billion in a last-ditch effort to avoid bankruptcy, analysts said.
That turnaround was symbolically completed last month when Standard & Poor’s became the last of the three major credit ratings agencies to confer investment-grade status on Ford’s debt, which the agency had rated at junk-bond levels for the past eight years.
“It’s hard to overstate how much they’ve done for cost reduction since 2009,” said Dan Picciotto, a corporate ratings analyst with S&P.
Hau Thai-Tang, Ford’s group vice president of global purchasing, announced last week that the automaker, which purchases $100 billion in parts annually, plans to cut costs further by reducing the number of its suppliers by 40 percent, to about 750 preferred companies.
Ford is in a more stable position after working to close its gap in underfunded pensions and reduce incentives on new vehicles sold at dealerships, Picciotto said.
“But it’s all been done in the context of a growing market,” Picciotto said. “If there is a downturn, how does Ford operate in a different scenario ?”
Business, Pages 27 on 10/25/2013