Greater investments, sales fall to weigh on Ford first-quarter earnings

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Ford Motor stated on Thursday it expects reduced profits per share in the first quarter and reduced pretax profit in 2017 because of higher costs on commodities, warranties and investments and a fall in sales volumes specifically fleet sales.

Ford shares were low almost 1 percent at $11.66 in morning trading after the announcement, which preceded a financier presentation by the automaker’s chief financial officer, Bob Shanks.

The presentation comes as the United States automobile market continues to cars lose market share to trucks and SUVs, as low fuel rates have motivated consumers to opt for larger automobiles that have ended up being more fuel efficient in the last few years.

“We believe we can do more with trucks, we think we can do more with utility vehicles, we can do more with performance and we’ve got strategies in place to do that,” Shanks stated. “We believe this can result in an even stronger position for us in the years ahead.”

Ford stated U.S. car market sales in 2017 ought to dip a little to 17.7 million units, below a record of 17.9 million in last year. The company stated sales should hit 17.5 million next year.

After a strong run in purchases since coming from the Great Recession earlier this decade, financiers are observing to know whether the existing boom cycle is slowing.

Ford stated it expects automobile sales in China, the world’s largest automobile market, to fall to 27.2 million this year from 27.5 million in last year.

“Our company believe Ford’s announcement today is the preliminary confirmation of our investment thesis that rates is degrading in North America and in select worldwide markets, especially China,” Buckingham Research Group expert Joseph Amaturo wrote in a customer note.

This will “cause revenues and capital for Ford and GM to deteriorate and disappoint investor expectations and more significantly company guidance,” he composed.

CFO Shanks stated in spite of the anticipated dip in industry sales, “we’re very comfortable that our entire business will improve.”

Ford stated it anticipates to earn between 30 cents and 35 cents per share in the first quarter.

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