Ford Q1 profit misses estimates image

While the No.2 US automaker did register a profit, it’s first quarter financial tally missed analysts estimates as warranty costs and the weather dented North America’s gains.

As the carmaker reported its North American profit was hit by a $400 million loss due to higher warranty costs and another $100 million because of higher freight cost during the harsh winter, the company’s shares went down by 3.4% at $15.77 on the New York Stock Exchange.

“Everybody is generally reacting, and certainly we do, as soon as we find a problem,” said Ford Chief Financial Officer Bob Shanks at the company’s suburban Detroit headquarters. “And you’re seeing that across the business. It’s not any particular company.”

Besides the higher than expected warranty costs, which were due to actions taken over the last two years, the North American profit decreased because of an aging line-up that spurred higher than usual incentives. Ford is addressing the situation with 16 new or revamped models across the region this year.

“The company has a lot of new products coming online this year,” said Fitch Ratings analyst Stephen Brown. “They haven’t seen the benefits (of the new vehicles) on dealer lots yet.”

In Q1, net income went down 39 % to $989 million, or 24 cents a share, from $1.61 billion, or 40 cents a share, in the same period last year. Also, the revenue was up a little over estimates, at $35.9 billion.

Via Reuters