GM General Motors Company

By Christina Rogers 

Ford Motor Co. reaped the benefits of its costly F-150 truck revamp, doubling net income in the first quarter and posting a North American operating margin rivaling those returned by high-end luxury brands.

The Dearborn, Mich., company is among a field of auto makers benefiting from record U.S. light-vehicle demand and low gasoline prices, a trend fueling sales of the most profitable units on dealer lots. As sales of trucks and SUVs soar, Ford is enjoying a disproportionate advantage over its Detroit rivals due to product redesigns rolled out since Chief Executive Mark Fields took over in mid-2014.

Ford is also gaining steam in China, making nearly a half-billion dollars in a market where it traditionally has been far behind General Motors Co. and other global heavyweights. That momentum, combined with an abrupt reversal of fortunes in Europe, is more than offsetting weakness in South America, Russia and other emerging markets.

Ford reported net income of $2.5 billion, or 61 cents a share, up from $1.2 billion, or 29 cents a share, in the first quarter of 2015. Whereas the first three months of last year were dogged by short supply of a new F-150 as the best-selling vehicle in the U.S. was being converted to an aluminum body, the company was able to flood the market with that truck in 2016.

In North America, Ford posted a 12% margin in the first quarter, far outpacing the 8.7% delivered by GM during the same quarter and 7.2% reported by Fiat Chrysler Automobiles NV.

The margin follows a quarter when Ford relied heavily on fleet sales to support market-share growth in the U.S. Typically considered to be less profitable than retail sales, fleet reliance had been a source of concern for analysts.

On an operating basis, the company earned $3.8 billion or 68 cents per share, and the margin in its global automotive business nearly hit 10%. While far less than the global margin for some Japanese auto makers who traditionally benefited from currency translation, Ford's result is considered strong by Detroit's standards.

The results handily beat analyst expectations of 48 cents a share and could cheer investors who have been concerned that Ford's profitability has peaked as growth in the U.S. appears to be cooling. Ford shares were up nearly 2% in premarket trading, but Wednesday's $13.66 closing price represented a 3% decline compared with the beginning of the year.

Ford's revenue increased 11% to $37.7 billion, up from $33.9 billion in the same period a year ago.

"You're starting to see a better balance of profitability," Chief Financial Officer Bob Shanks said while talking to reporters, citing improving results in Asia and Europe. He said the company also still has opportunity for profit growth in the U.S.

As far as the belief that the best days are behind conventional auto makers after a half-decade of strong earnings, Mr. Shanks said, "we're proving that to be a misconception," he said. There is no sign that U.S. light-vehicle demand is headed for a pothole, he said. He disputed suggestions that the U.S. economy could be headed for a mild recession.

The company's launch of a new Super Duty F-Series truck is coming in the third-quarter. A heavier-duty version of its pickup truck line, Mr. Shanks said, it is the first major overhaul in 19 years and it should help lift earnings in the back half of the year.

Robust demand for Ford's pricier trucks, including the F-150 pickup, in the U.S. continued to drive its operating profits in North America, which nearly doubled to $3.1 billion in the first quarter versus a year ago. Ford's U.S. sales grew 8.4% in the first quarter.

Ford posted its best quarter in Europe since 2008, swinging to a $434 million pre-tax profit from a $42 million loss in the same period in 2015.

Profit in Asia Pacific doubled to $220 million versus $105 million a year ago amid growing profitability in China. Ford's equity income from its Chinese joint ventures was up 23% to $443 million in the just-ended quarter.

The loss in South America -- which is suffering from wider economic malaise -- widened to $256 million.

Write to Christina Rogers at christina.rogers@wsj.com

(END) Dow Jones Newswires

April 28, 2016 08:52 ET (12:52 GMT)

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