Ford Shares Rally on Q3 Results (F)

Shares of Ford Motor Company (NYSE: F) leaped 8.24% in regular trading hours on Wednesday after the company reported better than expected fiscal third-quarter results as robust sales in the North American market helped in offsetting sluggish demand from Europe.

For the fiscal third quarter, Ford reported a profit of $1.63 billion compared to a profit of $1.65 in the year earlier quarter. The slight dip in profit was attributed to substantial rise in tax rate.

Pre-tax operating profit stood at $2.2 billion or 40 cents a share, beating analysts’ consensual estimate for profit of 30 cents a share.

Revenue for the quarter stood at $32.1 billion down from $33.1 billion, in the corresponding period of last year.

In North American operations, the company posted a profit of $2.3 billion, a strongest third quarter performance since 2000 when Ford started separating its financing arm. Nevertheless, Ford’s European division lost $468 million in the same period.

Commenting over the results, Ford’s Chief Financial Officer, Bob Shanks said in a conference call, “North America will continue to carry the load.”

Also, the profit margins, which came at 12%, impressed analysts. This is now the third successive occasion where Ford’s profit margins stood at or over 10%. Speaking to Detroit news, Arthur Wheaton, an automotive industry expert and senior extension associate at Cornell University said that the fact that Ford’s assembly plants are running at nearly 100 percent helped the Company to bolster margins.

Nevertheless, Shanks warned that sustaining higher profit margins will be difficult for every quarter as increase in seasonal costs will hurt the bottom line. “We would not expect to have the same margin in fourth quarter. We’ll have a good quarter. It just won’t be as strong as (last) quarter,” added Shanks.

Meanwhile, in order to trim its losses in ailing European market, the company has initiated a restructuring program, which would result in closure of three European plants and lay-off of nearly 6,200 workers in next two years. Just last week, Ford said that it was expecting to lose about $1.5 billion in Europe for fiscal 2012 and 2013.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.