F Ford Motor Company

By Christina Rogers and Gautham Nagesh 

Ford Motor Co. swung to a $1.9 billion net profit, or 47 cents a share, in the fourth quarter amid accounting changes and rising sales, capping a lucrative year for the U.S. auto industry and fueling a strong near-term earnings outlook despite turbulence in emerging markets.

The No. 2 U.S. auto maker in terms of volume relied primarily on increased light-truck demand in its home market for its most recent quarterly performance, but also reported improved results in Asia and Europe.

Ford originally reported a modest gain for the fourth quarter of 2014 but revised several years of results earlier this month due to a change in pension accounting, leading the company to say it actually had a $2.5 billion net loss in the final three months of that year.

Adjusted earnings per share of 58 cents solidly beat Wall Street expectations for 51 cents a share. Ford's stock, which has slumped in recent weeks, was up 1.1% in premarket trading Thursday.

Credit Suisse analyst Dan Galves said that while Ford is selling a strong mix of more profitable trucks and sport utilities, pricing and fixed costs are headwinds. This "is a bit concerning coming into what looks like a U.S. market that is plateauing [and] drives our cautious view."

Ford, like its crosstown rival General Motors Co., took advantage of low gasoline prices and record industry volumes in 2015.

The company said pretax profit for 2015 equaled $10.8 billion, up 48% from the prior year and falling in line with its original financial guidance. Ford moved this month to mark-to-market pension accounting, increasing 2015 pretax earnings by about $1.5 billion and requiring earnings revisions dating back to 2011.

Chief Financial Officer Bob Shanks maintained the Dearborn, Mich., auto maker's forecast for equal or higher operating results in 2016, saying the company's operations outside the U.S.--representing only a fraction of the auto maker's profitability last year--are set to blossom.

"This isn't just a North America story," Mr. Shanks said, referring to last year. "We really started to see the international markets come forward."

Revenue for the final three months of the year rose 12% to $40.3 billion, as sales increased in three of the company's five global regions. Operating profit for the quarter was $2.6 billion, double the $1.3 billion earned in the same period in 2014.

Ford's North America operations, posted a $2 billion fourth-quarter operating profit, up from $1.6 billion in the period a year ago. Margin of 8.2%, however, was several percentage points lower than the margin pace set in the two prior quarters amid higher seasonal costs and a $600 million charge for a new labor deal.

Ford will pay out a record $9,300 per worker in profit-sharing bonuses in March to factory employees represented by the United Auto Workers union.

Mr. Shanks said he is confident the U.S. market will remain strong, albeit at a slower growth rate, noting that low interest rates and cheap gasoline will continue to drive demand for the company's highly profitable pickup trucks.

The company's stock price has tumbled in recent weeks, falling to a three-year low in early January after Ford signaled margins in North America could flatten out. Investors worry Ford's profitability has peaked, putting pressure on company executives to deliver strong results internationally at a time when China's economy is cooling and emerging markets, like Russia and Brazil, remain troubled.

Ford's Europe unit swung to a $131 million profit in the fourth quarter, lifting the operation to its first annual profit in nearly a half decade. Asia Pacific, which includes China--the world's largest auto market --delivered a $444 million operating profit, up from $95 million in the prior fourth quarter.

Mr. Shanks said he is confident the Chinese car market will continue to grow, despite recent volatility in the stock market. He anticipates South America, meanwhile, will worsen with the economy continuing to contract, rising inflation and weak exchange rates.

Ford lost $295 million South America in the fourth quarter, compared with $187 million in the same period a year ago.

Write to Christina Rogers at christina.rogers@wsj.com and Gautham Nagesh at gautham.nagesh@wsj.com

(END) Dow Jones Newswires

January 28, 2016 10:07 ET (15:07 GMT)

Ford Motor (NYSE:F)
Historical Stock Chart
From Mar 2024 to Apr 2024

Ford Motor (NYSE:F)
Historical Stock Chart
From Apr 2023 to Apr 2024