Ford Motor Co. (NYSE:F) saw its shares climb today after a big drop in its first quarter earnings, due to costly model recalls, lower sales and rising raw material prices proved less than expected.
The Dearborn, Michigan-based automaker saw its net income fall by 35% to US$1.6bn, with adjusted pre-tax profit coming in at US$2.2bn and earnings per share of US$0.39, above market expectations for US$0.35 per share.
Ford's revenue rose by 4% to US$39bn in the first quarter, with its automotive revenue of US$35.2bn, beating forecasts for US$34.2bn.
The car giant had already warned investors and analysts to expect weaker results in the first quarter, with the group having posted a record pre-tax profit in the first quarter of 2016.
On track for full-year pre-tax profits of US$9bn
Ford’s chief financial officer, Bob Shanks said the company remains on track for a full-year pre-tax profit of US$9bn, down from the US$10.4bn reported in 2016.
The autos group announced two North American product recalls in March that cost the company US$295mln, with 230,000 vehicles recalled because of engine fire risks and 210,000 vehicles for defective door latches.
Those were in addition to a recall last fall of 2.4mln vehicles to fix door latches which cost Ford US$600mln.
North American market shares drops
Ford said its sales dropped slightly in the first quarter to 1.7mln vehicles, with its North American market share dropping as it sold fewer vehicles to rental fleets, although sales to individual US buyers were higher.
Sales also fell in China, as customers in the country rushed to buy vehicles at the end of 2016 before a tax incentive expired, according to Shanks, so the market suffered in the first quarter.
In early New York trading, Ford shares were 0.5% higher at $11.66.