Retooling a plant for the new F-150 and higher warranty costs ate into Ford's profit, but the automaker was able to charge higher prices for its vehicles. Fred Katayama reports.
Ford made money in the latest quarter, and that profit blew past estimates, but it came with caveats. Retooling and higher warranty costs cut profit by nearly a third because Ford had to shut down a truck plant so it can make new aluminum F-150 pickup trucks. That production makeover cost it $700 million in cash. The F series is crucial to Ford because it's highly profitable, and it has long been the best-selling truck in the U.S. Profit also fell in Asia, where Ford spent money to launch five new plants and a new Lincoln. The company posted losses in the rest of the world, especially in Europe, where the downturn in Russia's economy widened its losses. On the bright side, like GM, Ford was able to command better prices for its vehicles, adding $281 million to its profits. And Ford said the launch of the F-150 is on track. Although Ford's market share fell in the U.S., it grew in Asia, especially in China. Deutsche Bank analyst Rod Lache said, "The North America EBIT result for the third quarter looked very strong ... The upside this quarter came from price and mix." Ford stock, which has outperformed GM this year, rose at the open.