Ford Profit Misses on Growing Recalls Amid Higher Costs
By Keith Naughton Apr 25, 2014 12:55 PM ET
Ford Motor Co. (F), beset by higher recall costs and bad weather, earned first-quarter net income of $989 million, down 39 percent from a year ago and less than analysts’ estimates. The shares fell.
Ford earned 25 cents a share excluding certain items, trailing the 31-cent average estimate for the first time since 2011. The company attributed the miss to an extra $400 million in warranty and recall expenses, a bigger loss in South America and bad weather in North America. Recall costs are rising across 2008 to 2013 vehicles, not from one specific model, said Chief Financial Officer Bob Shanks.
“We have seen more field-service actions over the last two years,” Shanks told reporters today at Ford headquarters in Dearborn, Michigan. Recalls have been increasing because “there’s more complexity in the vehicles, more technology in the vehicles. There’s better data and a better ability to very quickly identify issues. Everybody is generally reacting -- certainly we do -- as soon as we find a problem.”
General Motors Co. (GM), under scrutiny for its slow recall of 2.59 million small cars linked to 13 deaths, took a $1.3 billion charge for recall-related costs as it reported an 82 percent drop in first quarter profit yesterday. Ford slid 3.2 percent to $15.79 at 12:50 p.m. New York time, after falling as much as 3.7 percent. The shares gained 5.8 percent this year through yesterday after rising 19 percent last year.
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http://www.bloomberg.com/news/2014-04-25/ford-profit-misses-after-bad-weather-amid-higher-costs.html
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