Ford, General Motors Beat On Earnings With Differing Results

Michael Teague |

While Detroit enters the throes of its unique bankruptcy, two of the major domestic car manufacturers whose brand-identities are historically rooted in the beleaguered city have released impressive earnings reports since Wednesday.

Ford (F) , the second largest auto-maker in the US, reported net income for the second quarter of $1.2 billion, or an adjusted $0.45 per share on revenue of $36 billion, compared to the prior year period during which the company earned $1.04 billion, or $0.26 per share on revenue of $33.2 billion. Ford also beat expectations for the quarter that had earnings-per-share at $0.37 and revenue at $35.24 billion.

Furthermore, the company raised guidance for profits for the full year, saying that it now expects profits for 2013, before taxes, to at least match last year’s figure of $8 billion.

The results can be attributed to strong sales growth in foreign markets. During the recently ended quarter, profits from the company’s Asian operations constituted about 20 percent of total earnings, about $117 million, while profits from South America were up from the prior year period’s $5 million to $151 million. But Ford’s US sales were also up 15 percent during the period, a Q2 record.



Shares took a modest bounce on the news, closing up 2.5 percent to $17.37, the company’s best close since January of 2011, but had erased those gains in Thursday trading as General Motors (GM) released its own impressive earnings report.

For the second quarter GM posted profits of $1.26 billion, or $0.75 per share on revenue of $39.1 billion, against Q2 2012 during which the company netted $1.5 billion, or $0.90 per share on revenue of $37.6 billion. Excluding items, GM earned $0.84 per share, well in excess of consensus estimates of $0.75 per share.

Both GM and Ford have seen their stock nearly double in price over the last 12 months, with each up over 90 percent. But the two earnings reports, while similar in outline, are based on very divergent sales results. Ford’s recent success has been with smaller vehicles, including a new hybrid car, while GM benefitted greatly from higher prices on its new models of pickup truck and large sedan.

Unlike Ford, who more or less cleaned up on sales in Asia, and had less trouble in Europe, GM had a much tougher time abroad. Second quarter profit from China came in at $228 million, a reduction of 64 percent on the prior year period. And though the company managed to cut $400 million of European spending, and wrestle operating costs down to $110 million, about two-thirds of what Wall Street had expected, it still sees Europe as a challenging environment that is to a large extent beyond its control.

GM also took a hit during the quarter from the weak yen that the company’s Japanese competition has used to cut prices, putting further pressure on profits.

Shares for GM were down slightly approaching the closing bell, shedding 0.25 percent to $37.

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Companies

Symbol Name Price Change % Volume
GM General Motors Company 36.07 -0.34 -0.93 8,831,775 Trade
F Ford Motor Company 11.53 -0.17 -1.45 27,630,584 Trade
ENMGF Entourage Mining Ltd 0.01 0.00 0.38 12,000

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