Quarterly Profits: Ford Up, GM Down

quarterly profitsFord Motor Co. posted a second-quarter pretax profit of $2.6 billion, bolstered by a record performance in North America and its first quarterly profit in Europe in three years.

The pretax profit was up 44 million dollars from a year earlier. Ford’s second-quarter net income was 1.3 billion, an increase of 78 million compared with last year’s quarter. Ford’s net figure was trimmed by pretax special charges of 481 million, the company said. Revenue fell slightly to 37.4 billion dollars.

“Our One Ford plan continues to deliver, enabling us to reach our 20th consecutive quarter of profitability,” said CEO Mark Fields, who assumed the job on July 1 after the retirement of Alan Mulally. Fields said 2014 will mark an important step toward accelerating growth.

The North American pretax profit was 2.4 billion. The European pretax profit was 14 million, compared with a 306 million loss a year earlier. Ford attributed the improvement there to lower costs and favorable exchange rates. Ford’s North American operating margin increased from 10.6 percent to 11.6 percent.

Across town, rival General Motors’ unprecedented slew of safety recalls during the second quarter wiped out most of its profits, erasing the fruits of strong truck pricing in North America and sales growth in China.

General Motors posted an 85 percent drop in net income for the April-June period to 190 million from 1.2 billion dollars a year earlier. Recall-related costs and one-time expenses — including 400 million that GM has set aside to pay victims of its faulty ignition switch — reduced net profit by about 1.5 billion net of taxes.

The cost of 41 safety campaigns covering more than 20 million cars during the quarter was about 1.2 billion, GM said in a statement. Special items included the $400 million charge for the victims compensation fund as well as 874 million for anticipated recall costs over the next decade in North America, an accounting change that GM said is consistent with the practice of other automakers.

Revenue rose 1 percent to 39.7 billion.

GM shares fell 4.5 percent to $35.74. Some analysts said though North America provided the bulk of GM’s profit, the earnings there were lighter than they had expected.

“I think we’ve demonstrated resiliency as we’ve gone through this” recall blitz, CEO Mary Barra said during a conference call. “We understand that we have a lot more work to do.”

Barra said GM’s top-to-bottom review of pending safety issues dating to the 1990s is “substantially complete.”


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