ford shares tumble
Last Updated : GMT 09:07:40
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Last Updated : GMT 09:07:40
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On gloomy outlook

Ford shares tumble

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Egypt Today, egypt today Ford shares tumble

Ford joins some other industry experts who have said the American auto market
New York - Arab Today

Ford warned Thursday that it could miss its 2016 profit forecast due to a cooling of the US auto boom, which has forced car dealerships to boost incentives.

Ford, which had described the first quarter of 2016 as "absolutely terrific," offered a much more subdued outlook as it cautioned that higher discounts in the critical North American market would limit profitability.

Dealers throughout the auto industry have boosted incentives as sales have ebbed, Ford chief financial officer Bob Shanks said. "And we have been increasing along with that," he said.

Other stumbling blocks include a financial hit in Britain from the June vote to leave the European Union, cutthroat pricing in China that has dented profitability and high-cost vehicle launches in the second half of the year.

Ford said it "sees risks" to achieving its profit targets as it reported an 8.8 percent drop in second-quarter earnings to $2.0 billion. That translated into 52 cents per share, eight cents below analyst expectations.

Revenues rose 6.0 percent to $39.5 billion.

Ford's outlook contrasted with the sunny view offered last week by rival General Motors, which signaled it expects the multi-year US boom to continue in the second half of 2016.

But Ford joined some other industry experts who have said the American auto market will have trouble topping the record of 17.5 million cars sold in 2015, a peak in a multi-year hot streak supported by strong sales of sport utility vehicles and other large autos.

Part of the reason is a less rosy outlook for overall US economic growth this year, which Ford now projects at 1.9 to 2.3 percent, down from the April forecast of 2.1 percent to 2.6 percent. Ford also trimmed its global growth forecast.

Ford executives said they expect the more difficult US market to persist at least into 2017.

"I think we are in transition," Shanks said. "If you go back and think about what's happened since 2009, the industry has grown way in excess of GDP over that period of time.

"It is now plateauing and I think all the players in the industry, we have to kind of pivot."

One positive aspect was a near tripling of European operating profits to $467 million.

However, Ford cautioned that Brexit could hit Ford's results by $200 million in 2016 and $400-500 million in 2017 due to the sharp fall in the British pound.

Ford chief executive Mark Fields said auto sales in Britain through the end of 2016 could fall between five and 10 percent over the looming Brexit.

Ford also offered a muted outlook on China, noting stiffening price competition in the country that was a factor in an $8 million operating loss in the Asia-Pacific region.

Ford shares tumbled 8.4 percent to $12.68 in afternoon trade.

Rivals General Motors and Fiat Chrysler lost 3.7 percent and 4.8 percent, respectively.

Source: AFP

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